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TMI Blog2024 (6) TMI 584X X X X Extracts X X X X X X X X Extracts X X X X ..... ndents on cost of materials which are used in repair maintenance. The explanation (c) of the Rule 2A(i) very clearly provides that value adopted for the purpose of payment of VAT shall be taken as the value of property in goods transferred in the execution of the said works contract for determination of value of service portion in the execution of works contract. The identical issue in the case of repair of transformer activity stands considered by the Tribunal in number of decisions. In the case of M/S BALAJI TIRUPATI ENTERPRISES VERSUS CCE, MEERUT-II [ 2014 (2) TMI 1137 - CESTAT NEW DELHI] as also in the case of CCE, ALLAHABAD VERSUS M/S. KAILASH TRANSFORMERS [ 2014 (2) TMI 1136 - CESTAT NEW DELHI] and in the case of HINDUSTAN AERONAUTICS LTD. VERSUS COMMR. OF SERVICE TAX, BANGALORE [ 2009 (9) TMI 163 - CESTAT, BANGALORE] , the value of the goods used while carrying out repair activities was taken out of the service cost. Some of the said decisions stand confirmed by the Hon ble Supreme Court when the appeal filed by the Revenue was dismissed. Appeal of Revenue dismissed. - HON BLE MR. RAMESH NAIR, MEMBER (JUDICIAL) And HON BLE MR. C.L. MAHAR, MEMBER (TECHNICAL) Shri Anoop Kuma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in contract were also adjusted accordingly. Hence, it appeared that the labour rates mentioned in the contract was not the actual consideration of labour works carried out by them and as such Rule 2A(ii) was applicable for arriving at the value which provided for payment of service tax on 70% of the total amount charged for works contact during the period 01.07.2012 to March 2013. 2.1 On completion of investigation, a detailed show cause notice dated 29.09.2014 was issued to the respondent demanding service tax amount along with interest and penalty. Further, a periodic show cause notice dated 24.03.2015 covering the period 2013-14 was also issued demanding service tax along with interest and consequential penalties. 2.2 Respondent contested the show cause notices on merits as well as on limitation. The adjudicating authority after following due process of law vide impugned common Order-In-Original No. KCH-EXCUS-000-COM-08-09-15-16 dated 30.03.2016 dropped the demands. Being aggrieved the revenue is before the Tribunal. 3. On behalf of the Revenue, Shri Anoop Kumar Mudvel, Superintendent (AR) appeared and reiterates the grounds of appeals. He submits that in the present case the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been sold and whether VAT has been paid on such goods remains unsubstantiated by the order. As a consequence, the adjudicating authority has erred in applying Rule 2A (i) of the Valuation Rules. When the valuation of works contract service is not determined under Rule 2A(i) of the Valuation Rules. When the valuation of Works contract service is not determined under Rules 2A(i) of the Valuation Rules, Rule 2A(ii) will apply. 6. On the other hand, Shri Paritosh Gupta the Learned Advocate appearing on behalf of the respondent reiterates the finding of the impugned order. He submits that contention of the revenue in the present matter is not correct. The bills which are produced clearly shows that VAT is paid on the value of material supplied thereunder. Such Bills are also forming part of the relied upon documents in the show cause notice and therefore, it is not open for the department to claim ignorance of such fact. Such fact has not been disputed in the show cause notice and is evident from the said bills. 7. He also submits that the allegation of the department that the documentary evidence shows that the cost of the retained goods have an impact on the value of goods to be repla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly shown in contract itself. Moreover invoices issued by the respondent clearly shown that VAT has been paid on these goods/materials. Therefore there is no reason to deny the benefit of Notification No. 12/2003, dated 20-6-2003 to the Respondent. 9. We find that as regard the demand of Service Tax pertaining to the period from 01.07.2012 the ground of the department is that the reduction of value of the property in goods transferred in execution of the works contract as provided under Rule 2A(i) of the Service Tax (Determination of Value) Rules, 2006 is not admissible to respondent. To examine this issue, it would be appropriate to reproduce said Rule2A: 2A. Determination of value of taxable services involved in the execution of a works contract. - Subject to the provisions of section 67, the value of taxable service involved in the execution of a works contract (hereinafter referred to as works contract service), referred to in clause (8) of section 66E of the Act, shall be determined by the service provider in the following manner, namely :- (i) Value of works contract service shall be equivalent to the gross amount charged for the works contract less the value of transfer of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal in number of decisions. In the case of Balaji Tirupati Enterprises v. CCE, Meerut-II - ST Appeal No. 161 of 2012 as also in the case of CCE, Allahabad v. M/s. Kailash Transformers - Appeal No. 446 of 2012 and in the case of Hindustan Aeronautics Limited v. CST, Bangalore reported in 2010 (17) S.T.R. 249 (Tri.-Bang.), the value of the goods used while carrying out repair activities was taken out of the service cost. Some of the said decisions stand confirmed by the Hon ble Supreme Court when the appeal filed by the Revenue was dismissed. Reference can be made to the report made in Wipro GE Medical Systems Pvt. Ltd. - 2012 (28) S.T.R. J44 (S.C.). 13. We also refer to a decision of Allahabad High Court in the case of CC CE vs. Balaji Tirupati Enterprises reported in 2013 (32) S.T.R. 530 (All.) wherein the Hon ble Allahabad High Court has considered the following questions of law placed before the Hon ble High Court : (i) Whether any composite contract for providing service of complete repair of old and damaged transformer may be divided into service portion and goods portion on the basis of payment of VAT on certain goods used during repair? (ii) Whether provisions of Not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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