2019 (4) TMI 478 - AT - Service Tax

Valuation - inclusion of amount received by the appellant by sale of scrap on completing repairs and maintenance of the compressors - repair and maintenance service - difference of opinion - Held that - There being contrary view expressed by coordinate bench of same strength these matters be referred to Hon ble President to come to a conclusion as to whether the issue needs to referred to Larger Bench, if be so, for constitute Larger Bench to decide the issue as to whether the ratio laid down by Shapoorji Pallonji Co. Ltd. 2016 (12) TMI 729 - CESTAT MUMBAI , is correct or the ratio laid down by S.B. Shellers 2018 (12) TMI 258 - CESTAT ALLAHABAD . Matter referred to Larger Bench.

Summary

Issues:
1. Whether the amount received by the appellant from the sale of scrap during repairs and maintenance of compressors should be included in the valuation of service tax liability.

Analysis:
The appellant, engaged in repair and servicing of compressors, faced the issue of whether the revenue from selling scrap like copper scrap and waste oil during compressor servicing should be considered for service tax valuation. The appellant argued that the scrap sales should not be included, citing a judgment from the West Zonal Bench that supported this position. However, the revenue contended otherwise, pointing to a conflicting view from the Division Bench of the Tribunal at Allahabad. This conflicting interpretation led the Tribunal to refer the matter to the Hon'ble President for consideration.

The Tribunal noted the contradictory stances taken by different benches of the same strength on the inclusion of scrap sale proceeds in service tax valuation. As a result, the Tribunal decided to refer the issue to the Larger Bench for resolution. The Larger Bench would determine whether the precedent set by the Shapoorji Pallonji & Co. Ltd. case, which excluded scrap sale amounts from service tax valuation, should prevail over the stance taken in the S.B. Shellers case. The matter was formally referred to the Larger Bench for further deliberation and a conclusive decision.

In conclusion, the Tribunal acknowledged the conflicting interpretations regarding the inclusion of scrap sale proceeds in service tax valuation for compressor repairs. The matter was referred to the Larger Bench for a definitive resolution, as the differing views from coordinate benches necessitated a conclusive determination on the applicability of the precedents established in the Shapoorji Pallonji & Co. Ltd. and S.B. Shellers cases.