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2024 (4) TMI 326 - AT - Service TaxClassification of service - Management, Maintenance and Repair Service - Erection, Commissioning and Installation Service - providing the work of fire prevention and safety services - HELD THAT - In the impugned order Commissioner has discussed that the services provided by the appellant could not be classified under works contract service. He relied upon decision of the Hon ble Supreme Court in the case of M/S. KONE ELEVATOR INDIA PVT. LTD. VERSUS STATE OF TAMIL NADU AND OTHERS 2014 (5) TMI 265 - SUPREME COURT and concluded that the argument made by the appellant vis- -vis classification under works contract services cannot be upheld. However, the entire order is silent with regards to the determination of the value of the services after alleging abatement of the material. In terms of the case of SAFETY RETREADING COMPANY (P) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, SALEM, M/S TYRESOLES INDIA PRIVATE LMITED VERSUS THE COMMISSIONER OF CENTRAL EXCISE, GOA AND M/S LAXMI TYRES VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE 2017 (1) TMI 1110 - SUPREME COURT and Notification No 12/2003-ST as amended, the value of the material consumed in provision of the service needs to be excluded and the demand needs to be re-quantified. For the purpose of re-quantification of demand after excluding the value of the material consumed the matter needs to be remanded back to the Original Authority for determination of correct taxable value and service tax payable thereon. Other determination vis- -vis interest and penalty will depend upon the taxable value determined and the service tax short paid if any, under the category of management, maintenance and repair service. Matter is remanded back to the Original Authority - appeal allowed by way of remand.
Issues Involved:
1. Classification of services and determination of taxable value for service tax. 2. Applicability of abatement and exclusion of material value. 3. Imposition of interest and penalties under various sections of the Finance Act, 1994. Summary: Issue 1: Classification of Services and Determination of Taxable Value The appeal challenges the classification of services provided by the appellant, which include fire prevention and safety services, under 'Management, Maintenance and Repair Service' and 'Erection, Commissioning and Installation Service'. The appellant argued that the services should be classified under 'Works Contract Service', which would allow for a different taxable value determination under the works contract composition scheme with a 70% abatement. The Commissioner, however, concluded that the services could not be classified under 'Works Contract Service' based on the Supreme Court decision in M/s Kone Elevator India Pvt. Ltd. The Tribunal noted that the Commissioner's order was silent on the determination of service value after material abatement. Issue 2: Applicability of Abatement and Exclusion of Material Value The appellant contended that if the services were classified under 'Management, Maintenance and Repair Service', the value of materials consumed should be excluded as per Notification No. 12/2003-ST dated 20.06.2003 and its successor notifications. The Tribunal agreed, citing several precedents, including Safety Retreading Co. (P) Ltd., which held that the cost of materials sold during service provision should be excluded from the taxable value. The Tribunal found that the appellant had provided sufficient documentary proof of material consumption and was registered with VAT authorities as a dealer for providing 'Work Contracts'. Issue 3: Imposition of Interest and Penalties The Tribunal noted that the determination of interest and penalties under Sections 75, 76, 77, and 78 of the Finance Act, 1994, would depend on the re-quantified taxable value and the service tax short paid, if any. The Tribunal remanded the matter back to the Original Authority for re-quantification of demand after excluding the value of materials consumed. Conclusion: The appeal was allowed, and the matter was remanded back to the Original Authority for re-quantification of the service tax demand within three months. The Tribunal expressed gratitude to Shri Dharmendra Srivastava, Chartered Accountant, who appeared as amicus curiae.
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