Separate invoicing of parts excludes their value from service tax base, and out-of-scope vehicle repairs were not taxable.

Where parts supplied by an authorised service station were separately invoiced and VAT was paid on the goods component, their value could not be added to the taxable value of service for service tax. Repair and maintenance of vehicles of other manufacturers, being outside the station's authorisation on the facts stated, was also not includible in the taxable service demanded. The differential service tax demand, along with interest and penalty, was therefore unsustainable, granting the assessee full relief.

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Issues: (i) Whether the value of parts supplied and separately invoiced by an authorized service station was includible in the taxable value of service for levy of service tax. (ii) Whether repair and maintenance of vehicles of other manufacturers was liable to service tax in the hands of an authorized service station.

Issue (i): Whether the value of parts supplied and separately invoiced by an authorized service station was includible in the taxable value of service for levy of service tax.

Analysis: The invoices showed the sale of parts separately, VAT had been discharged on the material supplied, and service tax had been paid separately on the service component. The circular on valuation applied where goods were separately billed and tax was paid on the goods portion, and the value of goods supplied could not be added to the service tax base.

Conclusion: The value of parts supplied was not includible in the taxable value of service, in favour of the assessee.

Issue (ii): Whether repair and maintenance of vehicles of other manufacturers was liable to service tax in the hands of an authorized service station.

Analysis: The assessee was an authorized service station for one manufacturer, and the work relating to vehicles of other makes was outside that authorization. On the facts, such activity was not liable to be included in the taxable service demanded in the impugned order.

Conclusion: Repair and maintenance of other manufacturers' vehicles was not includible in the taxable service, in favour of the assessee.

Final Conclusion: The demand of differential service tax, interest, and penalty could not be sustained, and the assessee obtained full relief.

Ratio Decidendi: Where goods are separately invoiced and VAT is paid on the goods component, their value cannot be included in the taxable value of the service; activity outside the relevant taxable service description is likewise not taxable on those facts.

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