2016 (11) TMI 485 - AT - Service Tax

Applicability of notification No. 12/03-ST dated 20.6.03 - exemption of the value of all taxable services as is equal to the value of goods and materials sold by the service provider to the recipient of service - Held that - the appellants were issuing separate invoices to service recipient, one indicating the value of goods sold, on which VAT was paid by them and the other indicating the value of service. This fact was clearly mentioned in the work order issued by M/s. Delhi Jal Board and the said fact was also reflected in the appellants balance sheet. Revenue s contention that such bifurcation of 80% and 20% is artificial is not based upon any evidence produced before us. As already observed by Joint Secretary, the same is bland allegation and not referring to any documentary evidence. If Revenue has alleged that same is artificial bifurcation, it is for them to substantiate the allegation by producing the sufficient documentary evidence. As lower authorities have examined the facts, as also the work order and the fact of issuance of separate invoices along with the fact of payment of VAT on the goods sold, we find no justifiable reason to interfere in the impugned order of the authorities below. Accordingly, Revenue s appeal is rejected.

Issues:
1. Applicability of notification No. 12/03-ST dated 20.6.03 regarding exemption of taxable services.
2. Dispute related to the value of goods and services provided by the service provider.
3. Rejection of Revenue's appeal by Commissioner (Appeals) and subsequent appeal filed by Revenue.
4. Allegation of artificial bifurcation of 80% goods and 20% services without documentary evidence.
5. Examination of separate invoices issued by the appellants for goods sold and services provided.

Analysis:
1. The case involved a dispute regarding the applicability of notification No. 12/03-ST dated 20.6.03, which exempts taxable services equal to the value of goods and materials sold by the service provider to the recipient of service, subject to documentary proof specifying the value of goods and materials. The respondents were engaged in providing repair and maintenance services to Delhi Jal Board under an agreement, with a breakdown of total consideration showing 80% as goods and 20% as services. They produced invoices reflecting this breakdown and paid VAT on the goods sold.

2. The Joint Commissioner vacated the show cause notice, noting that the break-up of 80-20% for goods and services respectively was supported by documentary evidence. The invoices indicated the value of goods and services in compliance with Notification No. 12/2003, and the ratio of material in the financial statements was found to be reasonable. The Joint Commissioner dropped the proceedings against the respondent based on these findings.

3. The Revenue appealed the Joint Commissioner's order before the Commissioner (Appeals), who also rejected the appeal. The appellants issued separate invoices to the service recipient, clearly indicating the value of goods sold and services provided, as supported by the work order from Delhi Jal Board and reflected in the balance sheet. The Revenue's contention of artificial bifurcation lacked evidence, and the lower authorities had examined the facts, work order, and VAT payment on goods sold. Consequently, the Tribunal found no reason to interfere with the lower authorities' decision and rejected the Revenue's appeal.

4. The Tribunal emphasized the importance of documentary evidence to support allegations of artificial bifurcation and upheld the lower authorities' decisions based on the examination of factual details and compliance with the notification's requirements. The case highlighted the necessity for Revenue to substantiate claims with sufficient evidence rather than making unsubstantiated allegations.

In conclusion, the Tribunal upheld the lower authorities' decisions, emphasizing the need for documentary evidence to support claims and the compliance with notification requirements in determining the value of goods and services provided by the service provider.

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