2023 (10) TMI 1302 - AT - Service Tax

Levy of service tax on the value of goods sold to their clients since no record were maintained for buying and selling of such goods - maintenance and repair service - 67% of gross value is towards the value of goods used in providing the service - HELD THAT - There is no dispute that the appellant have raised invoices for sale of material and service charge separately, towards the sale of material they have taken 67% as deemed sale price and even discharge the VAT on the said amount and in respect of the service they have paid service tax on 33% on the gross value, the appellant have taken this ratio on theoretical basis. However the chartered accountant in its certificate given the actual bifurcation of the material and service charge. From the chartered accountant certificate it is seen that even though the appellant have taken the 33% of the service charge, however, as per the certificate it comes to less than 30% and if this is taken as correct the appellant is required to pay service tax on the actual service charge which is much below 33% on which the service tax was discharged. Therefore, there is no value escaped from payment of service tax and the appellant has paid the service tax even in excess. Therefore there is no short payment of service tax. The impugned order set aside - appeal allowed.

Summary

Issues involved:
The issue involved in this case is whether the appellant correctly discharged the service tax on the value of goods sold to their clients under the category of maintenance and repair service, considering 33% as the service portion of the total value.

Summary of Judgment:

Issue 1: Discharge of service tax on the value of goods sold

The appellant discharged the service tax on 33% of the gross value of the service charges, considering it as the service portion of the total value, while the remaining 67% was towards the value of goods used in providing the service. The department contended that the appellant should pay service tax on the value of goods sold to clients due to lack of records for buying and selling such goods. The Commissioner (Appeals) upheld this demand. However, the appellant argued that they correctly discharged the service tax by separately showing the value of goods on which VAT was paid and the service value. They referred to sample invoices and contended that even if they were not entitled to abatement of 67%, the deduction of material sold was permissible under Notification No. 12/2003-ST. The appellant's Chartered Accountant provided a certificate certifying the material and labor bifurcation. The tribunal found that the appellant had paid service tax on 33% of the gross value, which was more than the actual service charges. Therefore, there was no short payment of service tax, and the appeal was allowed with consequential relief.

This judgment highlights the importance of correctly discharging service tax obligations and maintaining accurate records to support tax calculations. It also emphasizes the significance of documentary evidence, such as invoices and certificates, in tax disputes before tribunals.