2015 (12) TMI 19 - AT - Service Tax

Valuation - Non inclusion of value of the photographic service provided by the respondent the value of photographic paper and processing chemicals - Held that - In the case of State of Karnataka etc Vs. Pro Lab and Others etc. (2015 (2) TMI 388 - SUPREME COURT OF INDIA) the Supreme Court discussed the trajectory of the issue regarding the vivisectability of works contracts - payment of service tax and VAT are mutually exclusive, there remains no doubt that the value of photographic paper and consumables cannot be included in the value of photography service to levy service tax. - Following the same, no merit in Revenues appeal - Decided against Revenue.

Summary

Issues:
- Whether the value of photographic paper and processing chemicals should be added to the value of photographic services for service tax calculation.
- Whether the service provided falls under a works contract.

Analysis:
- The Revenue appealed against an Order-in-Appeal that set aside a previous order confirming a service tax demand on the grounds that the value of photographic paper and processing chemicals was not included in the value of the photographic service provided by the respondent.
- The Revenue argued that the cost of material should be added to the value of the photographic services, citing relevant judgments. The Ld. Departmental Representative acknowledged that the issue had been settled by the Supreme Court in the case of State of Karnataka vs. Pro Lab and Others.
- The respondent's advocate contended that the value of goods should not be included in the value of service and that the service was rendered under a works contract.
- The Tribunal considered the trajectory of the issue regarding the vivisectability of works contracts as discussed in the case of State of Karnataka vs. Pro Lab and Others. The Supreme Court held that works contracts can be bifurcated into components for sale of goods and services, making the goods component exigible to sales tax.
- The Tribunal concluded that the value of photographic paper and consumables cannot be included in the value of photography service for levying service tax, based on the judgments of the Supreme Court in relevant cases such as Imagic Creative Pvt. Ltd. vs. Commissioner of Commercial Taxes.
- Consequently, the Tribunal found no merit in the Revenue's appeal and dismissed it.