Separate invoicing of goods value supports exclusion from service tax under Notification No. 12/2003-ST

Where the value of materials and ATF was separately shown in the invoices and supported by the record as actual, not notional, the conditions of Notification No. 12/2003-ST were satisfied. The separate disclosure in the invoices and the absence of any finding that the stated value was fictitious supported exclusion of the material component from the taxable value. The benefit could not be denied merely because the service also involved repair or maintenance activity, and the service tax demand on the material component was unsustainable.

---

---

Issues: Whether the value of materials and ATF shown separately in the invoices was excludible from the taxable value under Notification No. 12/2003-ST dated 20.06.2003, so as to deny the demand for service tax on the material component.

Analysis: The invoices reflected the cost of materials, ATF and service charges separately, and verification of sample invoices showed that the material value was not arrived at on a notional basis. The show-cause notice itself acknowledged separate disclosure of the material value, and neither the notice nor the adjudication order recorded a finding that the stated value was fictitious or not reflective of the actual transaction. The appellant also had not availed CENVAT credit. On these facts, the conditions for the benefit of Notification No. 12/2003-ST were satisfied. The contrary decisions relied on by the Revenue were distinguishable on their facts.

Conclusion: The value of materials and ATF was rightly excluded from the service tax computation, and the demand could not be sustained.

Ratio Decidendi: Where the value of goods sold is separately shown in the invoices and is supported by the record as actual and not notional, the benefit of Notification No. 12/2003-ST cannot be denied merely because the service also involved repair or maintenance activity.

---