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TMI Blog2025 (1) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... y, he submits that the handling charges is shown in the sale invoice of the car and which is the part of total sale value of the car and on the total value the VAT at the rate of 12% + 2.5% was charged, therefore the handling charges cannot be liable to service tax. He submits that this issue is no longer res-integra as the same has been decided in various following judgments:- * Indian Oil Corporation Ltd. V. CCE - 2015 Taxpub (ST) 0505 * Automotive Manufacturers Pvt Ltd V. Comm. Of Central Excise & Customs Nagpur. - 2015 (63) Taxman 236 * Infinium Motors Guj Pvt Ltd V. CST Service Ahmedabad * Commissioner of Customs, Central Excise & Service Tax V. Andhara Sugars Ltd. - 2018 Taxpub (ST) 0318 (SC) * CCE v. Vasavadatta Cements Ltd - 2018 Taxpub (ST) 0770 (SC) * Jivan Jyot Motors Pvt Ltd - (2023) 11 Centax 119 (Tri.-Mumbai) * CST V. UFO Moviez India Limited - 2022-VIL-07-SC-ST * CST V. UFO Moviez India Limited - 2021-VIL-11-SC-ST * UFO Moviez India Limited V. CST 2017-VIL-774-CESTAT-ST * Ketan Motors Limited V. CCE - 2014 (33) STR 165 (Tri.) * CCE V. Seva Automotive Pvt. Limited - 2016 (46) STR 428 (Tri.) 3. Shri Girish Nair, learned Assistant Commissioner AR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord, without going into issue of classification, we find that there is no dispute that handling and forwarding charges which was charged by the appellant from customers is undisputedly a part of sale price. For ease of reference, sample copy of the sale invoice is scanned below:- 6. From the above invoice it can be seen that VAT 12.5% was calculated on the total value i.e. basic price plus handling and forwarding charges and paid to the concerned State authorities. In this fact, as per the aboce invoice, handling and 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 v. UFO Moviez India Limited - 2022-VIL-07-SC-ST (in Civil Appeal No. 181 of 2022 dated 6-1-2022) wherein the Hon'ble Supreme Court has passed the following order:- "In the facts of the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsaction between the service station and the customer is a sale or not, is to be determined taking into account the real nature and material facts of the transaction. Payment of VAT/sales tax on a transaction indicates that the said transaction is treated as sale of goods". 5.3 From the reading of the above circular, it would appear that even in a case of composite transaction involving sale of goods and rendering of service, if the bill/invoices issued clearly shows payment of sales 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 ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stations. The Revenue was of the view that the handling charges for the spare parts should form part of the taxable value of the service rendered by the appellants. Accordingly, a notice dated 16-2-2005 was issued demanding service tax of Rs. 2,52,543/- for the period July, 2001 in February, 2004. The said demand was confirmed vide order dated 18-5 2006. Against this, the respondent preferred an appeal before the lower appellate authority. The lower appellate authority noted 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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