2013 (11) TMI 1410 - AT - Service Tax

Appellate Tribunal defers interpretation of Notification No. 12/2003-ST on repair services.

M/s HINDUSTAN AERONAUTICS LTD Versus COMMISSIONER OF SERVICE TAX

The Appellate Tribunal CESTAT CHENNAI (LB) declined to interpret Notification No. 12/2003-ST in a case involving repair and maintenance services under the ... Inclusion of cost of material used during the provision of services - Repair and maintenance service - Whether an assessee engaged in rendering services of repairs and maintenance to its customers having utilized various articles for providing effective repairs and maintenance would be entitled to avail the benefit of the Notification No. 12/2003-S.T., dated 20-6-2003 in relation to such articles - decision of the Tribunal in the matter of Agrawal Colour Advance Photo System v. CCE (2011 (8) TMI 291 - CESTAT, NEW DELHI (LB)) wherein similar issue had arisen and/has been sought to be referred for decision by a Larger Bench, in the view what is stated above and particularly taking into consideration the divergent views expressed by different Benches of the Tribunal and the Courts on the point in issue and the reference sought to be made in relation to the said issue to the Larger Bench - core of the dispute stands settled by higher authority of the Supreme Court and the Delhi High Court, we do not consider necessary to answer the issues referred for our consideration. The grievance of the appellant is in the circumstances more appropriately decided by the regular Bench which will now consider all relevant decisions presented for its consideration and resolution - Following decision of G. D. Builders And Others Versus UOI And Another [2013 (11) TMI 1004 - DELHI HIGH COURT] - Decided against assessee. Issues:Interpretation of Notification No. 12/2003-ST for repair and maintenance services under the Finance Act, 1994.Analysis:The judgment by the Appellate Tribunal CESTAT CHENNAI (LB) involved the interpretation of Notification No. 12/2003-ST regarding repair and maintenance services under the Finance Act, 1994. The matter was referred to the tribunal at a point when the decision of the Larger Bench in Aggarwal Colour Advance Photo System was pending consideration. The Larger Bench in Aggarwal Colour Advance Photo System had held that the value of services in relation to photography includes the gross amount charged, excluding the cost of unexposed film if sold to the client. The value of other goods and material, if sold separately, would be excluded under the exemption Notification No. 12/2003, with the term 'sold' interpreted based on the Central Excise Act, 1944 definition of 'sale'.In the present appeal, the taxable service in question was repair and maintenance service, not photography service. The dispute arose as the assessee claimed benefits under Notification No. 12/2003-ST to exclude the cost of goods sold to the service recipient. The Revenue argued that the benefit of the notification should apply only to the sale of goods, excluding 'deemed sale' within a composite transaction involving service and sale. This conflicting position led to the order of reference before the tribunal.The tribunal considered the clarification provided by other decisions of the Tribunal and the Delhi High Court regarding the taxability of goods and services. The Delhi High Court's decision in G.D. Builders clarified that Section 67 of the Act is limited to ascertaining the value of the service component in complex transactions involving service and sale elements. The tribunal was urged to consider these clarifications, along with Supreme Court decisions, to understand the distinct taxability of goods and services.Given the submissions made by the counsel and representatives of the parties, the tribunal decided not to answer the issues referred for consideration. It was deemed more appropriate for the regular bench to decide the matter, considering all relevant decisions presented for resolution. Therefore, the tribunal declined to answer the reference and remitted the appeal to the regular bench for further consideration and resolution.