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TMI Blog2023 (10) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... ation according to which where spare parts are used by service station for servicing of vehicles. Service tax should levied on the entire bill including the value of the spare parts raised by the service provider namely service stations. The revenue in their appeal taken the above clarification in isolation as the same is applicable only in such cases where any assessee is providing the service of authorized service stations and in the bill service charges and cost of spares are shown and a consolidated bill of service is raised. In the present case even though the consolidated bill was raised but they have shown separate portion of service and spare parts and in the portion of spare parts, it is clearly shown as a sale of goods and VAT was paid. Therefore, even by considering the above board circular according to Para1 of the clarification, It is clear that when the spare parts was sold and VAT was paid no service tax can be charged thereon. Similarly, in the case of handling charges the same is included in the sale value of the sale of the vehicle and on total value the VAT was paid. Therefore, the handling charges are nothing but incidental to the sale of the goods and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further submits that Para 6 of the Central Board of Excise and Customs circular dated 23.08.2007 clarified all the earlier circular include the circular dated 05.03.2003 relied upon by the Adjudicating Authority stands withdrawn. Therefore, the finding of the Adjudicating Authority is not correct. He submits that the board circular is binding on the Adjudicating Authority therefore, he should not have dropped the proceeding at the show cause notice. 3. Shri Jigar Shah, Learned Counsel appearing on behalf of the respondent submits that now the issue is no longer res-Integra as in the identical facts where the sale bill includes any elements on which VAT has been paid the same will not be subject to Service Tax. He submits that in respect of spare parts used for servicing of the vehicle the sale bill was raised showing sale of such spare parts and VAT thereon has been paid. Similarly, the handling charges also part of the sale value of the vehicle, which is incidental to the sale of the vehicle on which the VAT was paid. Therefore, on this ground also no Service Tax can be demanded, he placed reliance on the following judgments and board circular: Circular No. 96/7/2007-S.T., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvicing of the vehicle, if any spare part is used and the same is shown as sale of the goods and VAT is paid no service can be demanded on the same. The revenue in the appeal misinterpreted the said clarification by considering part of the portion of the clarification in second Para thereof that any goods used in the course of providing services are to be treated as inputs and used for providing the service and accordingly cost of such inputs to be included. Considered the third Para of the clarification according to which where spare parts are used by service station for servicing of vehicles. Service tax should levied on the entire bill including the value of the spare parts raised by the service provider namely service stations. 4.1 We find that the revenue in their appeal taken the above clarification in isolation as the same is applicable only in such cases where any assessee is providing the service of authorized service stations and in the bill service charges and cost of spares are shown and a consolidated bill of service is raised. In the present case even though the consolidated bill was raised but they have shown separate portion of service and spare parts and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forwarding charges nothing but part of the sale value of the vehicle sold by the appellant to their customer. It is obvious that sale value consists of various elements and the same cannot be vivisected to contend that some part of the value represent to the sale of goods and some part towards service. Once on total value the VAT is paid then on any part of such value service tax cannot be demanded. This legal proposition affirmed by Hon ble Supreme Court in the case of CST vs. UFO Moviez India Limited - 2022-VIL-07-SC-ST (in Civil Appeal No. 181 of 2022 dated 06.01.2022) wherein the Hon ble Supreme Court has passed the following order:- In the facts of the present case as it is not disputed that the respondent had regularly paid amount towards VAT liability in respect of the subject goods during the relevant period, the question of claiming service tax thereon does not arise. Accordingly, in the facts of the present case, the civil appeal is dismissed. From the principle laid-down by Hon ble Supreme Court in the above decision, it is settled that when VAT has been paid on the sale of goods, the question to claim service tax thereon does not arise. 7. We f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s tax/VAT on the spare parts, then the value of such spare parts would not be includible in the gross consideration received for rendering of service. The Commissioner has not considered these submissions made by the appellant and also the clarifications issued on the matter. Therefore, we are of the considered view that the matter has to go back to the adjudicating authority for fresh consideration. First of all, all the transactions involving only sale of spare parts should be excluded for the purpose of computation of service tax demand. Secondly, even in a case where the transaction involves both sale of spare parts and also rendering of service, the value of sale of spare parts should be excluded if sales tax/VAT liability has been discharged on such sales as is evident from the invoices/bills issued in this regard. The appellant is directed to produce before the adjudicating authority all the evidences they would like to rely upon in support of their above contention. (b) In Automotive Manufacturers P. Limited the Tribunal passed the following order:- 5. We have carefully considered he submissions made by both the sides. We notice that the appellant are charging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that in the case of authorised service stations, the cost of the spare parts are not to be included in the value of the services rendered as per Section 67 of the Finance Act, 1994, as it stood at the relevant time, since the cost of spare parts itself is not includible; therefore, handling charges incurred in respect of such spare parts also will not form part of the taxable value of the service rendered. Accordingly, he dropped the demand. The Revenue is aggrieved of the same and is before us. 3. The Revenue reiterates the grounds urged in the show cause notice that handling charges incurred for the spare parts should form part of the taxable value of the services rendered. 4. The ld. Counsel for the respondent reiterates the conclusions drawn in the appellate authoritie s order. 5. We have carefully considered the submissions made by both the sides. 5.1 Section 67 as stood in the relevant time provided for exclusion of cost of spare parts sold while rendering repair services of automobiles. If that be so, the cost of handling of such spare parts incurred by the respondent would also not form part of the taxable value of the service rendered. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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