2006 (6) TMI 1 - AT - Service Tax

Service Tax Photography Appellant claimed that cost of paper and other materials consumed during the photography service is eligible for deduction Service contract have no element of sale of goods

Summary

Issues: Valuation of photographic service

Analysis:
The dispute in this case revolves around the valuation of photographic services. The appellant claims that the cost of photographic paper and materials consumed during the provision of the service should be eligible for deduction based on Notification No. 12/2003. The appellant also cites a clarification by the board and a previous Tribunal decision supporting their claim for deduction. On the other hand, the ld. SDR argues that this claim contradicts legal provisions and a judgment of the Hon'ble Supreme Court in a specific case.

The period of dispute is from April 2003 to September 2003. The value of taxable service during this period was defined as the gross amount charged by the service provider. The explanation to the relevant section specified elements to be excluded, including the cost of unexposed photography film sold to the client. However, in this case, it is noted that no unexposed photography film was sold, only exposed photographs were provided to customers.

The exemption notification and clarification relied upon by the appellant are examined. The notification exempts the value of goods and materials sold by the service provider to the recipient of service, subject to specific conditions. The clarification emphasizes the need for the service provider to maintain records showing the material consumed or sold during the provision of taxable services, with the value of such material indicated on the bill/invoice issued.

A Tribunal judgment in the case of Adlabs is referenced, where the Tribunal ruled in favor of the appellant based on the Board's clarification and notification. However, this ruling is challenged as it is argued that the Supreme Court has conclusively established that in services like photography, there is no element of sale of goods. Therefore, the appellant's claim for deduction of input costs is rejected based on the Supreme Court ruling, the terms of the exemption notification, and the clarification of the Board.

In conclusion, the appeal is dismissed based on the above legal interpretations and precedents, including the ruling of the Hon'ble Supreme Court and the specific provisions of the exemption notification and clarification issued by the Board.