Interpretation of service tax exemption for repairs and maintenance hinges on whether consumed goods count as "sold" under the notification.

Interpretation of Notification No. 12/2003-S.T. was central to whether an assessee providing repairs and maintenance services can exclude the value of articles used in the service, and whether "value of goods and materials sold" covers goods and materials merely consumed during performance, including by deemed sale. The issue turned on the meaning of "sold" in the exemption notification and the existence of conflicting views among different Benches and Courts. Owing to those divergent authorities and the fact that a similar question had already been proposed for Larger Bench consideration in another matter, the question was referred to a Larger Bench for decision.

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Issues: Whether an assessee rendering repairs and maintenance services can claim the benefit of Notification No. 12/2003-S.T. in respect of articles used in providing the service, and whether the expression "value of goods and materials sold" includes goods and materials consumed in the course of rendering such services, including by way of deemed sale.

Analysis: The issue turned on the construction of the exemption notification and the meaning of the word "sold" used therein. In view of divergent views expressed by different Benches and Courts on the point, and because a similar issue had already been sought to be referred for decision by a Larger Bench in another matter, it was considered appropriate to place the present issue before a Larger Bench as well.

Conclusion: The question was directed to be referred to the Larger Bench for decision.

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