2009 (6) TMI 460 - AT - Service Tax

Photography services- valuation- Assessee was rendering photography services. The original authority held that the value of material, namely photography chemicals and papers which have been used in rendering the photography services should be included in the value of taxable service. Commissioner (Appeals) held that in the service relating to photography, if certain goods and materials consumed, then the value of those goods and material cannot be included in the value of services for levy of service tax, thus allow the appeal. In the light of the decision of Shilpa Color Lab v. 2007 -TMI - 1022 - CESTAT,BANGALORE, held that- there is no merit in the appeal of the department, thus the appeal is rejected.

Summary

Issues: Valuation of photography service for service tax purposes

In this judgment by the Appellate Tribunal CESTAT, New Delhi, the issue involved is the valuation of photography service for the purpose of levy of service tax. The original authority had included the value of materials, such as photography chemicals and papers, used in rendering the photography service in the taxable service value, leading to tax demands and penalties. However, the Commissioner (Appeals) held that the value of goods and materials consumed during photography services should not be included in the service value for service tax levy, and thus allowed the appeals of the parties.

The Departmental Representative argued that the chemicals and papers used in photography were not sold to customers but consumed by the service providers during print development. The representative relied on previous Tribunal decisions like CCE v. Prasad Film Laboratories and Associated Film Indus. (P.) Ltd. to support this argument. On the other hand, the Advocate for the respondents cited the case of Shilpa Color Lab v. CCE and other Tribunal decisions to demonstrate that the value of materials like unexposed film and chemicals used in print development should not be included in the taxable service value.

The Tribunal examined the submissions from both sides and referred to the decision in the case of Delux Colour Lab (P.) Ltd., where it was established that the service of photography involves elements of both sale and service, which can be separated. The Tribunal concluded that the value of materials consumed during the photography service should not be included in the taxable service value. This decision was supported by previous cases like Ajanta Color Labs and Shilpa Color Lab, which were also upheld by the Hon'ble Supreme Court. Consequently, the appeals of the Department were rejected based on the established legal principles.