2014 (9) TMI 414 - HC - Service Tax

Court quashes orders, remands for compliance with exemption notification and appellate order. Errors in assessment process rectified.

The Court allowed the writ petition, quashed the impugned orders, and remanded the matter for fresh consideration to ensure compliance with the exemption ... Valuation - reduction of the value of material supplied - notification no. 12/2003 dated 20-6-2003 - Held that:- value of goods and material sold by service provider to the recipient of service shall be exempted from Service Tax liable under Section 66 of the Finance Act, 1994 but admittedly the assessing authority while passing impugned order has completely ignored aforesaid notification for the reasons best known to him though he must be well aware of the said notification issued by Central Government. - matter is remanded for fresh decision - Decided in favor of assessee. Issues:1. Ignoring a notification issued by the Central Government regarding the exemption of Service Tax on the supply of material.2. Assessment orders being considered illegal by the appellate authority.3. Quashing of impugned orders and remanding the matter for fresh consideration.Analysis:Issue 1: The judgment addressed the issue of the assessing authority ignoring a notification issued by the Central Government regarding the exemption of Service Tax on the supply of material by the service provider to the recipient. The Court noted that the petitioner's work contract included both services and the supply of material. The Central Government's notification dated 20-6-2003 exempted the value of goods and material sold by the service provider from Service Tax under Section 66 of the Finance Act, 1994. The Court observed that the assessing authority had disregarded this notification while passing the impugned order, which led to the need for re-examination by respondent No. 2.Issue 2: The judgment also discussed how similar matters had been considered by the appellate authority, which found the assessment orders related to work contracts to be illegal. The appellate authority had directed the deduction of Service Tax on the quantum of material supplied in such cases. The Court referred to a specific order dated 12-12-2013 passed by the Commissioner (Appeals), Customs, Central Excise & Service Tax, which highlighted the incorrect approach taken by the assessing authority. The Court deemed it necessary for respondent No. 2 to re-examine the matter in light of the relevant notification and the appellate order.Issue 3: As a result of the above analysis, the Court allowed the writ petition, quashed the impugned orders dated 6-11-2012 and 13-12-2013, and remanded the matter to respondent No. 2 for fresh consideration. The Court directed respondent No. 2 to pass a new order within two months from the date of the production of a certified copy of the judgment, taking into account the notification dated 20-6-2003 and the appellate order dated 12-12-2013. This comprehensive judgment aimed to rectify the errors in the assessment process and ensure compliance with the relevant legal provisions and notifications.