2007 (5) TMI 134 - AT - Service Tax

Tribunal grants waiver & stay in elevator maintenance case interpreting tax laws

The Tribunal granted waiver of pre-deposit and stay of recovery to the appellants in a case involving the interpretation of Notification No. 12/2003-S.T. ... Valuation(Service tax) - Revenue contended that appellant is not entitle for abatement of cost of certain components/parts of elevators from the gross amount received from the customer under AMC - Matter consider as arguable and waiver of pre-deposit and stay of recovery granted Issues involved:Interpretation of Notification No. 12/2003-S.T. for abatement of cost of components/parts under Annual Maintenance Contract (AMC) for elevators.Consideration of whether Sales Tax paid on components/parts exempts them from Service Tax.Evaluation of the applicability of the Tribunal's decision in Adlabs v. Commissioner of Central Excise, Bangalore [2006 (2) S.T.R. 121 (Tri.-Bang.)].Analysis:Issue 1: Interpretation of Notification No. 12/2003-S.T. for abatement of cost of components/parts under AMC:The appellants sought the benefit of abatement under Notification No. 12/2003-S.T. for certain components/parts of elevators supplied under AMC. The Commissioner, as the revisional authority, denied the benefit stating that there was no sale of components/parts invoiced separately to customers. The appellants argued that Sales Tax was paid on replaced components/parts, supported by relevant invoices and Sales Tax authorities' orders. The Tribunal noted the Commissioner's reliance on Circular No. 59/8/2003-S.T. and the absence of separate invoicing. The appellants referenced the Tribunal's decision in Adlabs v. Commissioner of Central Excise, Bangalore, where deduction of material value was allowed under the same Notification.Issue 2: Consideration of Sales Tax payment on components/parts exempting them from Service Tax:The differential Service Tax demanded was Rs. 1,48,213/- on the cost of components/parts supplied under AMCs. The AMC did not specify the cost of replacements, indicating free replacements for unspecified components/parts. However, the components/parts supplied were Sales-Tax-paid, as evidenced by invoices and assessment orders. The Tribunal acknowledged the Commissioner's interpretation but emphasized the principle that Sales Tax paid on goods should exempt them from Service Tax, which should not be overlooked while interpreting the Notification.Issue 3: Applicability of the Tribunal's decision in Adlabs v. Commissioner of Central Excise, Bangalore:The Tribunal found the issue in this case to be highly debatable. Considering the arguments presented, the Tribunal inclined to grant waiver of pre-deposit and stay of recovery for the small amount of Service Tax demanded by the Commissioner, highlighting the arguable nature of the issue.In conclusion, the Tribunal granted waiver of pre-deposit and stay of recovery as requested by the appellants, emphasizing the interpretative complexities surrounding the abatement of cost of components/parts under the relevant Notification and the interaction between Sales Tax and Service Tax in such scenarios.