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TMI Blog2019 (2) TMI 1177X X X X Extracts X X X X X X X X Extracts X X X X ..... he overall invoice value into the material and spares cost as well as labour charge and have discharged the service tax liability only to the extent of labour charges. The only reason for denying the benefit of the Notification is that the documentary proof specifically indicating the value of the said goods and services was not available on the part of the appellant - In this connection an identical activity has been considered by the Hon’ble Supreme Court in the case of Safety Re-trading Co. Pvt. Ltd. [2017 (1) TMI 1110 - SUPREME COURT], where it was held that in terms of Section 67 of the Finance Act, 1994, the valuation of taxable services specifically excludes the cost of parts or other material, if any, sold to the customer while p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivity as well as the category under which the activity is liable for service tax payment, dispute arose about the consideration for charge of service tax under the above category. The appellant was paying service tax under the above category, after availing the benefit of the exemption under the Notification No. 12/2003. The said Notification granted exemption for the value of taxable service equal to the value of goods and materials sold by the service provider to the recipient of service. The benefit was subject to the condition that there is documentary proof specifically indicating the value of the said goods and materials. 2. Department, after perusal of a few invoices issued by the appellant for retreading activity, noticed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial in the total invoice value works out to about 90% of the value. She further pointed out that the appellant was also paying VAT under the Composition Scheme and referred to a few Annual Returns in form VAT-11 She submitted that the appellant has already discharged the service tax on the estimated 10% towards the labour charges and as such, she claimed that no further service tax is liable to be paid. (ii) She also relied on the decision of the Hon ble Supreme Court in the case of Safety Retrading Co. Pvt. Ltd. reported in 2017 -TIOL -28 (SC). In the said decision, the Apex Court has held that for the activity of re-trading carried out on old tyres, the service tax liability can only be to the extent of labour charges and canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tyres. The activity includes use of certain materials in the process of retreading. The appellant is found to charge a consolidated invoice for recovery of the charges from the customer. They were found to have imposed a stamp on the invoice indicating the split up of the overall invoice value into the material and spares cost as well as labour charge and have discharged the service tax liability only to the extent of labour charges. The lower authorities have held that the stamp on the invoices is not authentic and as such appellant has failed to satisfy the conditions of the Notification. The lower authority further held that the amount charged for sale of cushion tread rubber and labour /service charges are not shown separately. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and labour charges separately for the period 2005-06, 2006-07 and 2007-08. On the basis of the said evidence, the ratio of material value and labour charges works out to roughly 90:10. The appellant has also discharged the service tax in respect of the labour charges working out to roughly 10%. From a perusal of VAT returns, it is evident that VAT is being paid under the Composition Scheme. 10. In view of the above, we find no justification for denying the benefit of Notification No.12/2003. The appellant is entitled to the benefit of Notification and hence no demand for service tax will survive. 11. In the result, impugned order is set aside and appeal is allowed. [ Dictated and Pronounced in the open Court ] - - TaxTMI - TMIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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