2022 (4) TMI 426 - AT - Service Tax

Valuation - photography service - value of the goods such as photography paper and chemicals used for providing photography service is required to be included in the gross value for the purpose of charging service tax - applicability of exemption N/N. 12/2003-ST dt. 20/06/2003 in respect of goods such as photography paper and chemicals used for providing photography service - HELD THAT - The very same issue in the appellant s own case only for the different period has been considered by this Tribunal in the case of SHILPA COLOR LAB VERSUS COMMISSIONER OF C. EX., CALICUT 2006 (10) TMI 35 - CESTAT,BANGALORE wherein the appellant was also one of the parties, it was held that Service tax is only imposable in the amount charge for services not other than services. Identical issue has been considered in another judgment in the case of M/S. JAIN BROTHERS M/S. PUNJAB COLOUR LAB. VERSUS CCE, BHOPAL 2008 (11) TMI 58 - CESTAT, NEW DELHI where it was held that the photography service is a work contract involving both the elements of sale and service and the sale portion activity cannot be subjected to tax. Thus, the issue is no longer res integra and has attained finality in favour of the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Entitlement to exemption under Notification No. 12/2003-ST dated 20/06/2003 for goods such as photography paper and chemicals used in providing photography services.

Issue-wise Detailed Analysis:

1. Entitlement to Exemption under Notification No. 12/2003-ST:

The central issue in this case was whether the appellant was entitled to the exemption under Notification No. 12/2003-ST dated 20/06/2003 for goods such as photography paper and chemicals used in providing photography services.

Appellant's Argument:
The appellant's counsel argued that the issue was already settled in their favor in previous judgments, including the case of Shilpa Colour Lab Vs. CCE, Calicut, which was upheld by the Supreme Court. The counsel also cited several other judgments supporting their stance, including Jain Brothers Vs. CCE, Bhopal, and various other tribunal and high court decisions.

Respondent's Argument:
The respondent's representative reiterated the findings of the impugned order without introducing new arguments.

Tribunal's Findings:
The Tribunal carefully considered the submissions from both sides and reviewed the records. The Tribunal noted that the core issue was whether the value of goods like photography paper and chemicals used in providing photography services should be included in the gross value for service tax purposes or if the appellant was entitled to an abatement under Notification No. 12/2003-ST.

Previous Judgments:
The Tribunal referenced its previous decision in the Shilpa Colour Lab case, where it was held that the value of goods and materials sold by the service provider to the recipient of the service should be excluded for calculating service tax, provided there was documentary proof indicating the value of the goods and materials. This decision was upheld by the Supreme Court, thus settling the issue in favor of the appellant.

Legal Provisions and Notifications:
The Tribunal examined Section 67 of the Finance Act, which deals with the valuation of taxable services for charging service tax. It clarified that the value of any taxable service should be the gross amount charged by the service provider for such service. However, the Notification No. 12/2003-ST exempts the value of goods and materials sold by the service provider from the service tax, provided there is documentary proof of the value of such goods and materials.

CBEC Circular:
The Tribunal also referenced a CBEC Circular dated 07/04/2004, which clarified that service providers were entitled to claim exemption for input materials consumed/sold to service recipients, provided they maintained records showing the material consumed/sold during the provision of the taxable service.

Supreme Court's Stance:
The Tribunal noted that the Supreme Court, in the BSNL case, had overruled previous decisions that did not allow for the bifurcation of service and goods components in composite contracts. The Supreme Court held that once it is possible to bifurcate the sale or service portion in any transaction, the respective tax should be levied on the respective portions only.

Conclusion:
Based on the settled legal position and the precedents cited, the Tribunal concluded that the issue was no longer in dispute and had attained finality in favor of the appellant. Consequently, the Tribunal set aside the impugned order and allowed the appeal, affirming that the appellant was entitled to the exemption under Notification No. 12/2003-ST for the value of goods such as photography paper and chemicals used in providing photography services.

Order Pronounced:
The order was pronounced in open court on 29/03/2022.