2009 (4) TMI 272 - AT - Service Tax

Includibility of cost of materials used in providing the repair services - In terms of the impugned order the appellants are required to pre-deposit a sum of Rs. 17, 36, 16, 529/- towards service tax liability. - While demanding service tax the cost of the materials used had also been taken into account. appellant states that out of an amount of Rs. 17 crores liability an amount of Rs. 11 crores relates to the service tax on account of inclusion of the cost of the materials. As regards the balance amount the appellants had already discharged the service tax liability. - pre-deposit of 11 crore is waived

Summary

Issues:
1. Pre-deposit requirement of Rs. 17,36,16,529 towards service tax liability.
2. Inclusion of cost of materials in service tax calculation.
3. Applicability of previous Tribunal decisions in favor of the assessee.
4. Granting waiver of pre-deposit till appeal disposal.
5. Discharge of interest on the liability.

Analysis:

1. The judgment dealt with the requirement for the appellants to pre-deposit a substantial sum towards their service tax liability amounting to Rs. 17,36,16,529. The issue primarily revolved around the demand for service tax on repair services, including the consideration of the cost of materials used in the services. The learned Cost Accountant highlighted that a significant portion of the liability, specifically Rs. 11 crores, pertained to the service tax concerning the inclusion of material costs. It was mentioned that the appellants had already paid the remaining portion of the liability.

2. The Tribunal considered various decisions, including those of Wipro GE Medical Systems Pvt. Ltd., M/s. Delux Colour Lab Pvt. Ltd., M/s. Garg Photo Film, and M/s. Anurag Photo Lab, which favored the assessee's position on the issue of including the cost of materials in service tax calculations. Citing these precedents, the Tribunal leaned towards granting a waiver of the pre-deposit requirement for the balance amount of Rs. 11 crores until the final disposal of the appeal.

3. The Tribunal's decision to grant the waiver was influenced by the alignment of the current case with the principles established in the earlier Tribunal decisions that supported the assessee's contention regarding the treatment of material costs in service tax assessments. This alignment with past judgments played a crucial role in the Tribunal's determination to provide relief to the appellants by waiving the pre-deposit requirement for the specified amount.

4. It was noted that the interest on the liability had already been settled by the appellants, further indicating their compliance with the financial obligations associated with the service tax dispute. The Tribunal scheduled the matter for further hearing on 1st July 2009, emphasizing the ongoing nature of the legal proceedings and the need for continued attention to the case until its final resolution.

5. In conclusion, the judgment reflected a nuanced consideration of the pre-deposit requirement, the treatment of material costs in service tax calculations, the relevance of past Tribunal decisions, the grant of a waiver pending appeal disposal, and the discharge of interest on the liability. The Tribunal's decision underscored the importance of legal precedents and fair treatment in resolving complex service tax disputes.