2014 (5) TMI 259 - AT - Service Tax

Demand of service tax - Photographic service - Held that - Following decision of Aggarwal Colour Advance Photo System Vs. CCE, Bhopal reported in 2011 (8) TMI 291 - CESTAT, NEW DELHI (LB) - service tax under section 67 is leviable on the gross value of the photographic service which included the value of chemicals and components which are consumed on the process of the service provided - Decided in favour of Revenue.

Summary

Issues:
- Notice of hearing deemed served due to refusal by addressee
- Revision of adjudicating order regarding service tax demand
- Exclusion of consumables from gross value for service tax calculation
- Conflict between earlier decisions and the decision of the Larger Bench

Issue 1: Notice of hearing deemed served due to refusal by addressee
The judgment revolves around the notice of hearing forwarded to the respondent, which was returned with a refusal endorsement, deeming the notice served. This refusal led to the initiation of an appeal by the Revenue against the order of the CCE (Appeals), Indore, revising the adjudicating order concerning service tax demand.

Issue 2: Revision of adjudicating order regarding service tax demand
The appeal challenged the adjudicating order confirming service tax demand for specific periods along with interest and penalties under relevant sections of the Finance Act, 1994. The appellate authority based its decision on earlier judgments, which were subsequently overruled by the decision of the Larger Bench, leading to the setting aside of the order-in-appeal and restoration of the adjudicating authority's initial order.

Issue 3: Exclusion of consumables from gross value for service tax calculation
A crucial aspect of the case was the exclusion of the value of consumables, such as photographic materials and chemicals, from the gross value for service tax calculation. The appellate authority initially relied on previous judgments supporting this exclusion but was compelled to reverse its decision in light of the Larger Bench's ruling that service tax is leviable on the gross value, including the value of consumed components during the service provision process.

Issue 4: Conflict between earlier decisions and the decision of the Larger Bench
The conflict between the earlier decisions cited by the appellate authority and the decision of the Larger Bench highlighted the evolving interpretation of service tax laws. The judgment clarified that the decision of the Larger Bench supersedes previous rulings, emphasizing the importance of consistency and adherence to authoritative interpretations in resolving legal disputes related to service tax liabilities.