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2024 (9) TMI 554 - AT - Service TaxLevy of service tax - material consumed during retreading of tyres - value of the services rendered was below the threshold limit in terms of N/N. 6/2005 dated 1.3.2005. Whether Service Tax is leviable on the total amount charged for retreading of tyres including the value of material have been used and sold in the execution of Contract or only on service portion? - HELD THAT - The learned Commissioner observed that that the identical issue has already been decided by the Apex Court in the case of SAFETY RETREADING COMPANY (P) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, SALEM, M/S TYRESOLES INDIA PRIVATE LMITED VERSUS THE COMMISSIONER OF CENTRAL EXCISE, GOA AND M/S LAXMI TYRES VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE 2017 (1) TMI 1110 - SUPREME COURT where it was held that ' the appellant is liable for service tax on service portion only which is below threshold limit of SSI exemption.' Service tax on the service portion, which is below the threshold limit of SSI exemption - HELD THAT - The learned Commissioner seriously erred in observing that the appellant is liable to service tax on the service portion, which is below the threshold limit of SSI exemption. Once the finding is that the value of the service portion is below the threshold limit, they are entitled to exemption from service tax. The appellant is entitled to avail the benefit of the prescribed limit in terms of N/N.06/2005-ST dated 1.3.2005, whereby the taxable services not exceeding Rs.Four Lakhs were exempted in any financial year. The threshold exemption limit was enhanced to Rs.Eight Lakhs w.e.f. 01.04.2007 and Rs.Ten Lakhs w.e.f. 01.04.2008, which is applicable to the period in question - the appellant is entitled to exemption from the whole of the service tax leviable thereon under Section 66 of the Finance Act. There is an error in the impugned order when despite the findings being in favour of the appellant/assesee, the appeal filed by the Revenue was allowed. The appellant is liable to service tax on service portion only, which is below the threshold limit needs to be set aside - Appeal allowed.
Issues:
Challenge to order-in-appeal allowing Department's appeal against order-in-original dropping service tax demand on retreading services provided by the appellant. Interpretation of Notification no.12/2003 and notification no.6/2005 for exemption from service tax. Typographical errors in the impugned order leading to confusion regarding the liability of service tax on the appellant. Analysis: The appeal arose from an order-in-appeal allowing the Department's appeal against an order-in-original dropping the demand for service tax on retreading services provided by the appellant. The Department contended that service tax was leviable on the total amount charged for retreading of tyres, including the value of materials used. The Adjudicating Authority had initially dropped the demand, citing Notification no.12/2003 exempting service tax on materials used during retreading and notification no.6/2005 setting a threshold limit for service tax. The Commissioner (Appeals) agreed with the Adjudicating Authority's findings but, in a typographical error, set aside the order and allowed the Department's appeal. The appellant argued that the appeal should have been dismissed as the findings were in their favor. The impugned order noted the Apex Court's decision in a similar case, stating that service tax should be charged after deducting the value of materials. The Commissioner observed that the appellant fulfilled the conditions of Notification no.12/2003 and was liable for service tax on the service portion only, below the threshold limit. However, the Commissioner erred in concluding that the appellant was liable for service tax on the service portion below the threshold limit, as they were entitled to exemption under Notification no.06/2005 for services not exceeding the prescribed limit. The appellant should have been exempt from the entire service tax leviable under Section 66 of the Finance Act. The impugned order erroneously allowed the Department's appeal despite findings favoring the appellant. The appellant also pointed out typographical errors in the impugned order, requesting rectification. The errors led to confusion regarding the liability of service tax on the appellant. The Tribunal corrected the errors, setting aside the unsustainable conclusions and rejecting the Department's appeal. The appellant was granted exemption from service tax, and the impugned order was overturned. The appeal was allowed in favor of the appellant, pronouncing the decision on 11th September 2024.
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