2023 (6) TMI 66 - AT - Service Tax

Valuation of services - photocopying services - whether cost of consumables used in the photocopying services is includible in the assessable value or not, while the Service Tax is to be paid - period involved is April, 2001 to March, 2006 - extended period of limitation - HELD THAT - Admittedly, the issue as to whether the cost of consumables is includible in the assessable value or not was under dispute and was being litigated in various coordinate Benches of the Tribunal, who have taken varying stands and decisions. The matter had also gone up to the Hon ble Supreme Court and the matter was resolved by way of Larger Bench which shows that even the coordinate Benches were not on the same page on this issue. In the case of Nice Colour Lab vs CCE, Jaipur 2013 (5) TMI 201 - CESTAT NEW DELHI and Laxmi Colour Lab vs CCE 2012 (7) TMI 811 - CESTAT, NEW DELHI wherein on identical issues the Tribunals have held that the demand for the extended period does not sustain. Accordingly, he submits that the Appeal may be allowed on limitation. It is seen from the record that even in the Appellant s own case, the Commissioner (Appeals) has agreed with the submissions of the Appellant that they are eligible to get abatement towards the cost of consumables used by them. This would mean that within the same Department the Adjudicating Authority has taken stand that the value of consumables is to be added and the Commissioner (Appeals) has taken stand that the same is not required to be added. Such being the case, it is clear that the issue is that of interpretation. The confirmed demand for the extended period along with the interest is set aside - Assessee is required to calculate and pay the Service Tax for the normal period along with interest. Since the entire issue is on account of interpretational difficulties, all the penalties are set aside - Appeal disposed off.

Summary

Issues: Dispute regarding inclusion of cost of consumables in assessable value for photocopying services for Service Tax payment.

Summary:
The Appeals revolve around the question of whether the cost of consumables used in photocopying services should be considered in the assessable value for Service Tax payment. The Appellants had received Show Cause Notices invoking extended period provisions for the years 2001 to 2006. The Adjudicating Authority confirmed the demand, but the Commissioner (Appeals) ruled that the cost of consumables need not be added to determine the value for Service Tax. The Appellants challenged this decision, citing legal precedents and the ongoing dispute over the issue in various tribunals and courts.

The Appellants argued that recent judgments, including one by the Hon'ble High Court of Madhya Pradesh, supported their position that they were entitled to abatement for the cost of consumables. They were willing to focus the argument on the limitation issue to expedite the resolution. The Appellant emphasized that the issue was one of interpretation, citing cases where demands for extended periods were not upheld due to conflicting decisions and evolving legal interpretations.

The Appellant's representative highlighted the inconsistency in the Department's stance, with the Adjudicating Authority supporting inclusion of consumables while the Commissioner (Appeals) disagreed. Given the interpretational nature of the issue and the conflicting decisions at different levels, the Tribunal found in favor of the Appellant. The confirmed demand for the extended period was set aside, and the Appellant was directed to pay the Service Tax for the normal period along with interest, with all penalties waived due to the interpretational difficulties involved.

In conclusion, the Appeals were allowed in part, with the demand for the extended period and associated interest being overturned. The Appellant was instructed to calculate and pay the Service Tax for the regular period, and all penalties were waived considering the interpretational challenges surrounding the issue.