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2015 (10) TMI 1998 - AT - Service TaxValuation - reduction of value of material supplied from the value of service - issue of sale tax / VAT was under dispute with the state government, which has now settled - appellant had paid sales tax / VAT after settlement - Benefit of Notification No.12/2003-ST dated 20.6.2003 - management, maintenance or repair service - Held that - On the aspect of liability of the sales tax/ VAT on the goods supplied by the Appellant, the matter went up to Hon ble Supreme Court and after the intervention of the Hon ble Supreme Court, the disputed parties, namely the appellant and the respective state governments had settled the issue - it is prudent to remit the case to the adjudicating authority for deciding the issue of abatement of value of the materials supplied and applicability of Notification No.12/2003-ST dated 20.6.2003 afresh. Consequently, the impugned orders are set aside and the matter is remitted to the ld. adjudicating authority - Matter remanded back - Decided in favour of assessee.
Issues:
- Denial of benefit under Notification No.12/2003 for service tax liability on materials supplied along with services - Dispute over chargeability of local sales tax/VAT on supplied materials - Settlement of VAT payment to state government - Request for remand to adjudicating authority for re-examination Analysis: The Appeals were filed against Order-in-Originals by the Commissioner of Central Excise, Customs & Service Tax, Bhubaneswar-I, Orissa. The Appellant, a public sector undertaking, engaged in repair and overhaul of aircraft engines for various defense forces, was registered for taxable service under "management, maintenance or repair service." The issue arose when the Appellant transferred materials along with services in one invoice but paid service tax only on the service portion, considering the material transfer as a "deemed sale" not liable under Notification No. 12/2003 ST. The department raised demands by including material costs in service tax liability, leading to the Appeals. The Appellant's contention was that the benefit of Notification No.12/2003 was wrongly denied due to the absence of VAT payment on materials supplied, which was later settled with the state government post-Supreme Court intervention. The Appellant argued for a re-examination of the abatement issue under Notification No.12/2003-ST, requesting a remand to the adjudicating authority for fresh consideration. The Revenue had no objection to the remand, acknowledging the settlement of VAT payment not considered earlier. Upon hearing both parties and reviewing the records, the Tribunal found that the Appellant was denied the benefit of Notification No.12/2003 for service tax liability on materials supplied with services. The matter of VAT payment on supplied materials was resolved post-Supreme Court involvement, with the Appellant settling VAT with the state government. Considering these developments, the Tribunal decided to remit the case to the adjudicating authority for a fresh examination of the abatement issue and the applicability of Notification No.12/2003-ST. The impugned orders were set aside, and the Appeals were allowed by way of remand, granting both parties the opportunity to present necessary evidence for consideration. In conclusion, the Tribunal's decision to remand the case for re-examination based on the settled VAT payment and the unresolved abatement issue under Notification No.12/2003-ST was aimed at ensuring a fair consideration of the Appellant's claim and the applicability of the notification, maintaining transparency and providing a reasonable opportunity for both parties to present their case.
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