2013 (11) TMI 641 - AT - Service Tax

Benefit of exemption under notification No.12/03-ST - Evidence needed to prove value of goods - Held that - Notification No.12/03-ST provides to exclude the value of cost of materials sold by the service provider to the service recipient of service. During the course of hearing, ld. advocate placed a letter to show that they have placed the balance sheet and other documents before the audit officers to establish the value of the goods. At any event, it appears that said documents were not placed before adjudicating authority. Hence applicant failed to make out prima facie case for waiver of predeposit of entire amount of tax, interest and penalty - stay granted partly.

Summary

Issues:
Demand of service tax on management and maintenance and repair services for the period 1.4.04 to 31.3.08 due to non-computation of the cost of materials in the taxable value. Claiming exemption under notification No.12/03-ST dt. 1.7.2003. Failure to produce documentary evidence of material costs. Financial hardship claimed by the applicant. Prima facie case for waiver of predeposit of tax, interest, and penalty.

Analysis:

1. The judgment deals with a case where the applicant, engaged in container depot operations, faced a demand for service tax on management, maintenance, and repair services due to the alleged non-computation of the cost of materials in the taxable value for a specific period.

2. The applicant sought the benefit of exemption under notification No.12/03-ST dated 1.7.2003, which required the production of documentary evidence indicating the value of goods and materials sold to the recipient of service.

3. The advocate for the applicant presented an estimation showing the value of services and materials separately, along with copies of invoices. However, the Commissioner noted the absence of documentary evidence for the materials, stating that the values in the invoices were considered 'theoretical' and did not reflect the actual material costs.

4. The applicant, facing financial hardship and claiming to be a small entrepreneur incurring significant losses, failed to produce conclusive documentary evidence to support the claimed values, leading to a dispute regarding the actual cost of materials used in the services.

5. The appellate tribunal, after considering arguments from both sides and examining the records, found that the applicant did not meet the requirements for a prima facie case for the waiver of predeposit of the entire amount of tax, interest, and penalty. The tribunal directed the applicant to deposit a specified sum within a given timeframe to proceed with the appeal process.

6. The judgment emphasizes the importance of producing valid documentary evidence to support claims, especially in cases involving taxation matters, and highlights the significance of meeting the prescribed legal requirements to establish exemptions and financial positions effectively during legal proceedings.

This detailed analysis covers the issues involved in the judgment, including the demand for service tax, exemption claims, lack of documentary evidence, financial hardship arguments, and the tribunal's decision regarding the waiver of predeposit based on the presented case and financial circumstances.