Paints sold in vehicle repair work cannot be taxed again under service tax when sales tax is already paid.

Paints used in vehicle body repair work, when separately billed as materials sold and already subjected to sales tax, were not includible in the assessable value for service tax. The operative principle applied was that the same value cannot be subjected to both sales tax and service tax, as that would amount to double taxation. On the invoice structure and the separate labour charge, service tax was confined to the labour component only, and the demand on paint value was unsustainable. Interest and penalties were also not payable on that component.

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Issues: Whether the value of paints used in vehicle body repair work, on which sales tax had already been paid, was liable to be included in the assessable value for service tax.

Analysis: The service provider undertook body repair of vehicles and separately reflected the value of paint as part of materials sold, on which sales tax had been paid, while service tax was paid only on the labour component. The dispute turned on whether the value of goods already subjected to sales tax could again be subjected to service tax. The decision was governed by the principle that where goods are sold and sales tax is paid on that value, service tax cannot be levied again on the same component, as that would amount to double taxation. The cited precedents were applied to the invoices and billing structure produced in the case.

Conclusion: The value of paints sold was not includible in the taxable service value, and service tax was not payable on that component. Interest and penalties were also unsustainable.

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