2018 (4) TMI 296 - AT - Service Tax

Valuation - inclusion of VAT - whether service tax is required to be paid on the entire consideration received by the appellant towards providing the service of retreading which also included the value of the goods used in such service on which the value added tax also has been paid? - Held that - the issue is squarely covered by the decision in the case of Safety Retreading Co, P, Ltd. Vs, CCE, Salem 2017 (1) TMI 1110 - SUPREME COURT , where it was held that The finding of the appellate Tribunal that it is the entire of the gross value of the service rendered that is liable to service tax, in our considered view, does not lay down the correct proposition of law which, according to us, is that an assessee is liable to pay tax only on the service component which under the State Act has been quantified at 30%. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Appeal against various Orders-in-Original regarding payment of service tax on retreading services including the value of goods.
2. Settlement of the issue by the Hon'ble Supreme Court in a previous case.
3. Applicability of Section 67 of the Finance Act, 1994, on the valuation of taxable services.
4. Dispute resolution based on the Supreme Court decision.

Issue 1: Appeal against Orders-in-Original on Service Tax Payment:
The appellant, a Private Limited Company engaged in re-treading of tyres, filed six appeals against Orders-in-Original related to the payment of service tax on retreading services. The dispute revolved around whether service tax should be paid on the entire consideration received by the appellant for providing the service, which included the value of goods used in the service on which value-added tax was also paid. The period under dispute in all appeals was from 01.10.2006 to 31.03.2012.

Issue 2: Settlement by the Hon'ble Supreme Court:
The appellant's counsel cited a previous decision by the Hon'ble Supreme Court in a Civil Appeal related to the appellant, along with other Civil Appeals, to argue that the issue in the present appeals had been resolved in favor of the appellant. The counsel relied on the decision in the case of Safety Retreading Co. Pvt. Ltd. Vs. CCE, Salem, and a Tribunal case in favor of the appellant. The learned DR agreed that the Supreme Court decision would resolve the issue at hand.

Issue 3: Applicability of Section 67 of the Finance Act, 1994:
The Hon'ble Supreme Court's decision highlighted the interpretation of Section 67 of the Finance Act, 1994, regarding the valuation of taxable services for service tax purposes. The Court emphasized that the exclusion of costs of parts or materials sold to the customer during maintenance or repair services was clear in the Act. The Court rejected the view that the entire gross value of the service rendered was liable to service tax, stating that tax should be paid only on the service component quantified under the State Act.

Issue 4: Dispute Resolution based on Supreme Court Decision:
After considering the Supreme Court decision, the Appellate Tribunal set aside the impugned orders and allowed all appeals with consequential relief. The Tribunal followed the Supreme Court's decision and concluded that the appellant was liable to pay tax only on the service component, not the entire gross value of the service rendered. The Tribunal's operative portion of the order was pronounced on 13/12/2017, granting relief to the appellant based on the legal interpretation provided by the Supreme Court.

This detailed analysis covers the key issues involved in the legal judgment, including the settlement by the Supreme Court, the interpretation of relevant legal provisions, and the final resolution of the dispute by the Appellate Tribunal.