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TMI Blog2020 (4) TMI 380X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction. The Circular also clarifies that payment of VAT or Sales Tax on a transaction indicates that the said transaction is treated as sale of goods. The decision in Semtech Industries [ 2014 (4) TMI 995 - CESTAT NEW DELHI ] clearly holds that when invoices are issued showing the value of the goods used and the service charges separately, service tax would be chargeable only on the service/ labour charges and the value of goods used for repair would not be includable in the assessable value of the service. It is not in dispute that while raising the invoices, the Appellant had separately shown the cost of the goods and the cost of service. The invoices also shows that VAT had been charged for the sale of spare parts. Thus, if a sale h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partment has, however, submitted that the findings recorded by the Commissioner do not suffer from any infirmity. 5. The submissions advanced by the learned Counsel for the Appellant and the learned Authorised Representative of the Department have been considered. 6. Both the sides have placed reliance upon the Circular dated 23 August 2007. It would be appropriate to reproduce the relevant portion of the circular dealing with spare parts sold during the Service of vehicles and it is as follows: Reference Code Issue Clarification (1) (2) (3) 036.03/ 23-8-07 Whether spare parts sold by a service station during the servicing of vehicles is liable to payment of service tax? Whether exemption can be claimed on the cost of consumable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the customers is a sale or not is to be determined taking into account the real nature and material facts of the transaction. The Circular also clarifies that payment of VAT or Sales Tax on a transaction indicates that the said transaction is treated as sale of goods. 8. The aforesaid circular was interpreted by the Division Bench in M.G. Motors in the Appeals filed by the Appellant in regard to the same issue for the subsequent period. The Division Bench noted the submission of the Appellant in the following words: "The Appellant pleads that there is Board's Circular No. 96/7/2007-ST dated 23 August 2007 stating that service tax is not leviable on the transaction of sale, treated as sale of goods and subjected to levy of Sales Tax/VA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew of this, we hold that Service Tax would be chargeable only on the Service/Labour charges i.e. on service component and the value of goods used for repair would not be includible in the assessable value of the service. The learned DR has cited Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006 accordingly to which that "where any expenditure or costs are incurred by any service provider in the course of providing a taxable service, all such expenditures or costs shall be treated as consideration for the taxable service provided or to be provided and shall be included in the value of the services for the purpose of charging Service Tax on the said service, unless such costs or expenditure have been incurred by the service p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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