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TMI Blog2016 (8) TMI 1029X X X X Extracts X X X X X X X X Extracts X X X X ..... ? – Board's Circular dated 23.10.2008 – Held that: - as these goods are primary requirements for providing the 'output services' for such service providers, the goods including vehicles, aircrafts, vessels etc., are in the nature of 'inputs'. It is emphasized here that this clarification is valid only when the output service is in the nature of service defined under the provisions of Section 65 (105) (zzzzj) of the Finance Act, 1994 and the goods in question are the tangible goods supplied during the course of providing the taxable service. The determination of service tax liability therefore require to be predetermined after taking into account eligible input credit – matter remanded – appeal disposed off – decided in favor of appellant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e referred notice, the appellants gave a suitable reply substantiating the grounds to prove that the allegations proposed in the notice is not legally correct and in view of the same, the demand proposed in the notice is liable to be dropped. 1.4. Adjudicating authority has passed the impugned order dt. 31/03/2011 and confirmed the demand proposed in the notice, while dropping penalty under Section 78 of the Finance Act, 1994 and reducing the demand of ₹ 1,11,92,932/- as against ₹ 1,40,40,355/-proposed towards SOTG service. Hence this appeal. 2. The appellant represented by Sri. V.J. Sankaram submitted the following arguments:- a. As regards mining services (period of dispute: January to April 2008) entire amount dema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rival submissions made by both sides and also gone through the records of the case. 5. We first take up the matter of imposability of equal penalty under Section 78 of the Finance Act, 1994. We find that the penalty of ₹ 1,83,31,469/- equals the total of the demands made in respect of mining service, supply of tangible goods service and transport of goods service. In respect of mining service, we find the Order-in-Original itself takes note of the contention of the appellant that APMDCL had collected service tax on mining activity from their customers and not the appellant was responsible for discharging service tax liability on mining service. This itself indicates that there definitely was some uncertainty on whom the burden of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant portion of Board's Circular referred to is reproduced below: Supply of tangible goods including machinery, equipments and appliance for use, without transferring right of possession and effective control of such tangible goods is a taxable service in terms of provision of Section 65 (105) (zzzzj) of the Finance Act, 1994. In some case, vehicles, aircrafts, vessels etc., are also supplied in the above manner and such activities also fall under the said taxable service. In this regard, a doubt has arisen whether the credit of excise duty / Additional duty of Customs (commonly known as CVD) paid on such items are available to the provider of such taxable service and if so whether such goods should be considered as 'inputs' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said items used by the appellant as primary requirements for providing supply of tangible goods service. 8. To sum up we hereby order as follows: a. Imposition of penalty equal to service tax demand, under section 78 of the Finance Act 1994, is set aside. b. The matter is remanded to original authority for de novo determination of service tax liability only in respect of supply of tangible goods service, after taking into account eligible input credit on the aforesaid items used by the appellant as primary requirements for providing supply of tangible goods service. c. We however do no interfere with the other remaining portions of the impugned order. 9. Appeal allowed by way of remand in above terms. (Operative part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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