2017 (1) TMI 1028 - AT - Service Tax

Exemption under N/N. 12/03-ST dated 20.01.2003 - the appellant is engaged in retreading the tyres. For this, tread rubber, red cement and other chemicals are used - denial on the ground that the sale is not evidenced as per the documents perused - Held that - the Original Authority had examined the documents submitted by the appellant and categorically recorded that the material cost shown in the invoice as verified by him is to be excluded from the taxable value in terms of the N/N.12/03-ST. The first Appellate Authority reversed to the decision (of original authority who has allowed the exemption) in his ex parte proceedings - the Original Authority has correctly arrived at the assessee s liability and the present impugned order is not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Eligibility for exemption under notification no.12/03-ST for service tax on retreading of tyres.
2. Disallowance of benefit of the notification by the Commissioner (Appeals) based on lack of evidence.
3. Interpretation of whether goods consumed in providing services can be considered for exemption under the notification.

Analysis:
1. The appeal challenged an order demanding service tax on the gross amount, including the value of materials, during the retreading of tyres. The appellant claimed exemption under notification no.12/03-ST for the value of materials consumed. The Original Authority confirmed the service tax liability but allowed the exemption. However, the Commissioner (Appeals) disallowed the benefit, citing lack of evidence of sale in the documents.

2. The appellant submitted invoices and a Chartered Accountant's certificate to establish the split-up value of goods and services. They argued that they were eligible for the notification based on the evidence provided. The Revenue contended that goods consumed in providing services are integral to the service and cannot be considered for exemption under the notification.

3. The Tribunal analyzed the case and found that the invoices clearly separated the value of materials and service charges. The Original Authority had verified the material cost and excluded it from the taxable value, in line with the notification. The Tribunal referenced previous decisions supporting this interpretation and concluded that the appellant was eligible for the exemption. The impugned order disallowing the benefit was set aside, and the appeal was allowed.

This detailed analysis highlights the key legal issues, arguments presented by both parties, and the Tribunal's reasoning leading to the decision in favor of the appellant regarding the exemption under notification no.12/03-ST for service tax on retreading of tyres.