Custom, Excise & Service Tax Tribunal
Cce & St, Meerut - Ii vs Shri Krishna Swaroop Agarwal on 11 July, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
BENCH-DB
Date of Hearing: 11.07.2014
ST/3720/2012-CU[DB]
[Arising out of Order-in-Appeal No. 194-ST/MRT-II dated 31.07.2011 passed by the Commissioner (Appeals), Central Excise, Meerut-II]
For Approval & Signature :
Honble Mr. Justice G. Raghuram, President
Honble Mr. R.K. Singh, Member (Technical)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3.
Whether their Lordships wish to see the fair copy of the order?
4.
Whether order is to be circulated to the Department Authorities?
CCE & ST, Meerut - II Appellant
Vs.
Shri Krishna Swaroop Agarwal Respondent
Present for the Appellant : Shri Sameer Agarwal, Advocate Present for the Respondent : Shri Ranjan Khana, DR FINAL ORDER NO. 53495/2014 DATED: 28.08.2014 PER: R.K. Singh The Revenue has filed this appeal against Order-in-Appeal No. 194-ST/MRT-II dated 31.07.2011 which set aside the Order-in-Original No. 13/ADDL. COMM./M-II/2012 dated 19.04.2012.
2. The facts, briefly stated, are as under:
M/s. Ashish Automobiles (Proprietor Krishna Swaroop Agarwal) provided the Authorized Service Station service. It was alleged that during the period January 2007 to March 2009 they discharged their service tax liability on the gross value of services but they did not take into account of the cost of spare parts or accessories or consumable such as lubricants and coolants provided/used during servicing of the vehicles. Adjudicating authority confirmed the demand amounting to Rs. 11,83,832/- along with interest and mandatory penalty. The Commissioner (Appeals) set aside the said Order-in-Original on the following grounds.
(i) Under Section 67 of the Finance Act the taxable value is the gross amount charged for the taxable service.
(ii) Even in terms of Notification No. 12/2003-ST the value of the goods and materials sold by the service provider to the recipient of service is exempt from the service tax.
(iii) As per the CBEC Circular No. 699/15/2003-CX dated 05.03.2003 the price charged by authorised service station for engine oil, gear oil and coolants, etc., is towards the sale of these consumables to the customer. Therefore, the sale of consumables during course of providing service is akin to sale of parts/accessories and therefore value of such consumables is not includible in the value of taxable services provided value of such consumables is shown separately.
(iv) The respondents had provided to the Commissioner (Appeals) their assessment orders of the trade tax department, Moradabad for the financial years 2006-2007 & 2007-2008 showing sale value of spare parts/accessories/consumables and it is this value which has been taken for computing the impugned demand.
3. The Revenue has filed the appeal on the following grounds:
(i) Board Circular No. 96/7/2007-ST dated 23.08.2007 (para 36.03) has specifically clarified that service tax is not leviable on a transaction treated as sale of goods and subjected to levy of sales tax/VAT. Whether a given transaction 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.
Any goods used in the course of providing service are to be treated as inputs used for providing the service and accordingly, cost of such inputs form integral part of the value of the taxable service Where Spare parts are used by a service station for servicing of vehicles, service tax should be levied on the spare parts, including the value of the spare parts, raised by service provider, namely, service station. However, the service provider is entitled to take input credit of excise duty paid on such parts or any goods used in providing the service wherein value of such goods has been included in the bill. The service provider is also entitled to take input credit of service tax paid on any taxable service used as inputs service for servicing of vehicles.
(ii) The respondent did not show proof of sale of spare parts of to the service recipients.
(iii) The Notification No. 12/2003-ST is not applicable as the value of spare parts/accessories is includible in the assessable value.
4. We have considered the facts of the case. The Board Circular referred to above in effect actually states that service tax is not leviable on the transaction treated as sale of goods and subjected to levy of sales of sales tax/VAT. It is seen that as recorded by the Commissioner (Appeals), respondents were able to establish that amount on which the impugned service tax has been demanded actually pertain to the sale of spare parts/accessories/consumables like lubricants etc. by showing copies of the VAT assessment orders for the financial years 2006-2007 & 2007-2008. It would clearly entitle them to the benefit of Notification No. 12/2003-ST. Indeed even the provisions of Section 67 lay down that the value for the purpose of levy of service tax is the gross amount charge for taxable service. Thus, we do not find any merit in the Revenues appeal which is hereby quashed.
[Dictated & Pronounced in the open Court].
(Justice G. Raghuram) President (R.K. Singh) Technical Member Neha 2