Custom, Excise & Service Tax Tribunal
M/S. Jain Brothers vs Cce, Bhopal on 25 November, 2008
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
West Block No. 2, R.K. Puram,
NEW DELHI
COURT NO. III
Service Tax appeal No. 510 of 2006 & 374 of 2007
(Arising out of order in appeal No. 72-ST/BPL/2006 dated 14.7.2006 & 03-ST/BPL/2007-08 dated 9.4.2007 both passed by the Commissioner (Appeals), Customs & Central Excise, Bhopal)
For approval and signature:
Honble Mr. M. Veeraiyan, Member (Technical),
Honble Mr.P.K. Das, Member(Judicial))
1. Whether Press reporters may be allowed to see the
order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should 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
Departmental authorities?
______________________________________________________
M/s. Jain Brothers,
M/s. Punjab Colour Lab., Appellants
Reptd. By Shri H.S. Mew, Advocate
Vs.
CCE, Bhopal Respondent
Rep. by Shri A.K. Madan, D.R. & Shri L.B. Yadav, D.R. Coram: Honble Mr. M. Veeraiyan, Member (Technical), Honble Mr. P.K. Das, Member (Judicial) Date of Hearing/Date of decision: 25.11.08 Order No. /2008 Per M. Veeraiyan:
Heard both sides.
2. The appellants were held to have rendered photography services falling under the category 65(105) zb. The dispute involved is, valuation of the said services. The department has included the value of printing paper & chemicals which have gone into preparation of photoprints. Learned advocate relies on the decision of the Tribunal in the case of Deluxe Color Lab. (P) Ltd., Final Order No. ST/285 to 288/08 dated 22.10.2008 wherein it has been held that photography service is a work contract involving both the elements of sale and service and the sale portion activity cannot be subjected to tax.
3. We have carefully considered the submissions from both the sides. The issue has already been covered by the decision of the Tribunal in the case of Deluxe Color Lab. (P) Ltd. (supra). In this regard relevant portion from the said order is reproduced below:-
12. It would thus appear that the decision in BSNL case lays down the law that works contract (and also catering contract) involves the element of both sale and service contract and that the service and sale elements can be split up. That being so, we do not find any merit in the submission of the Revenue that the decision in BSNL case cannot be treated as an authority on the issue of service tax. If the photography service is a works contract, it would follow that it involves the element of both sale and service, and the sale portion of the activity or transaction cannot be included in the taxable value of service. There cannot be any doubt, in view of sub-clause (b) of clause (29-A) of Article 366, that deemed sale of the materials takes place in the rendering of photography service and, therefore, the value of the materials cannot be included while computing the value of the service. Sale and Service cannot stand in the same box. Sale cannot be treated as service and vice versa.
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16. The pronouncement of law by the Supreme Court is binding on all Courts and authorities under Article 141 of the Constitution of India. Any decision of the High Court or the Tribunal or even the Supreme Court of lesser Bench strength has to be understood, read down (if necessary) and applied in the light of the binding precedents of the Supreme Court. As observed above, the dispute involved in these appeals is covered by the decision in BSNL case and, therefore, it is not necessary to make comments on the various decisions cited by the parties, referred to above. We are of the view that in the light of the alw laid down by the Supreme Court in BSNL case, the matter has to be reconsidered de novo by the authorities below.
17. One issue which we may deal with relates to limitation. According to the appellant, the impugned demands have been confirmed invoking the extended period of limitation, but as the appellants did not commit any fraudulent act nor suppressed any information from the Department much less with intention to evade the service tax, the non-payment, if any, by reason of non-inclusion of the value of the sale portion of the contract, that is, the non-disclosure of the gross total amount including the value of the materials, was on account of bonafide belief that service tax liability relates to the service part of the contract which has already been discharged by the appellants as per Notification No. 12/2003-ST. The case of the Revenue, on the point of limitation, on the other hand, is that the non-inclusion of the value of photography materials in the value of the taxable service was deliberate with intent to evade service tax. In view of our conclusion on the main dispute as to inclusion of the value of materials in the total value of taxable service e in favour of the appellants, it is clear that non-inclusion of value of materials being in accordance with law, the extended period of limitation cannot be invoked, and the question of limitation too has to be reconsidered while considering the appellants case.
4. In view of the above, we allow the appeals on merit and remand the matter to the original authority to determine the valuation in terms of the above decision. Appeals are allowed by way of remand. (Dictated & pronounced in the Open Court.) (M. VEERAIYAN) MEMBER (TECHNICAL) (P.K. DAS) MEMBER (JUDICIAL) RK