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TMI Blog2023 (5) TMI 1150X X X X Extracts X X X X X X X X Extracts X X X X ..... 75% to supply portion and 25% of AMC charges to service portion to avail the benefit of exemption from service tax in respect of value of goods and material sold by the service provider to the recipient of service. Under the Notification No. 12/2003-ST dated 20.06.2003, the appellant is required to provide documentary proof specifically indicating the value of the said goods and materials used in providing the service. The appellant is engaged not only in providing AMC services but also in selling computers, printers and peripherals. In the absence of any documentary evidence of value of consumables and other materials used co-relating to AMC services, the benefit of notification is rightly denied to the appellant. Maximum penalty of Rs.2,74,400/- in terms of Section 77 (1) (a) of the Finance Act, 1994 - Whether the penalty imposed at the maximum of Rs. 200/- for every day during which the failure to take registration continued amounting to Rs. 2,74,400/- is justified in the facts of this case? - HELD THAT:- Though imposition of penalty and the amount computed is absolutely legal, a lenient view can be taken in view of the amendments carried out to this Section in Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registration in terms of Section 77(1) (a) of the Finance Act, 1994. Further, a penalty of Rs.5,000/- under Section 77 (2) and a penalty of Rs. 5,30,181/- under Section 78 of the Finance Act, 1994 were imposed. The Commissioner of Customs Central Excise (Appeals), Trichy has upheld the above Order-in-Original dated 11.02.2013 and rejected the appeal filed by the appellant. Hence, the appellant came before this forum. 2.1 The allegations against the appellant are that they were involved in providing maintenance and repair services to customers of RICOH brand photo copier machines and also found collecting service charges without obtaining any service tax registration and without filing ST-3 returns. The appellant provided two kinds of maintenance services viz. Annual Maintenance Contract (AMC in short) and Comprehensive Customer Care Contract (4C in short). In case of AMC they undertake the repair and service of the copier machines for consideration fixed on annual basis and in the case of 4C contract, they provide consumables and spare parts as part of maintenance and maintenance charges are collected monthly basis, at rate per copy based on the number of copies taken. Sale b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The contract with the customers did not provide any breakup of goods, materials and consumables. 4. No description of goods sold was given in the invoices and 5. There were no sale invoices produced for supply of consumables forming part of the service. Whereas, the appellants argued that the essential condition required to be satisfied under Notification No. 12/2003-ST dated 20.06.2003, is that there should be sale of goods by the service provider to the recipient of service, the exemption will be equivalent to the value of goods and materials sold and there is documentary proof specifically indicating the value of such goods and services, the notification does not spell out what documents will be considered as proof of goods sold; that there is no requirement in the notification that the description of goods and materials sold must be specified in the documentary proof; it only specifies that the value of goods and materials sold must be supported by the documentary proof. Further, it has been put forth that the appellants have not randomly split up the supply and service portion in the ratio of 75:25 and the ratio adopted for splitting up is based on the past expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom service tax in respect of value of goods and materials sold by the service provider while providing the service? b) whether the penaly imposed at the maximum of Rs. 200/- for every day during which the failure to take registration continued amounting to Rs. 2,74,400/- is justified in the facts of this case? and c) whether the extended period is rightly invoked in the background of the facts obtained in this appeal? 5.2 On the issue of the appellant s eligibility for the benefit of Notification No. 12/2003-ST dated 20.06.2003, the lower adjudicating authority has held that the appellant has not produced any evidence regarding consumables or spare parts used while providing the AMC service to its customers and the service provider has charged service tax on the gross amount received for the AMC and 4C Bills raised upto April, 2009 and adopted the method of artificially splitting the AMC charges from 20.04.2009 onwards in the ratio of 75% to supply portion and 25% of AMC charges to service portion to avail the benefit of exemption from service tax in respect of value of goods and material sold by the service provider to the recipient of service. Under the Notification No. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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