2008 (5) TMI 29 - AT - Service Tax

Appellants win right to deduct raw materials cost in Photography Services case.

The Tribunal ruled in favor of the appellants, engaged in Photography Services, allowing them to deduct the cost of raw materials and outside printing ... Deduction of cost of raw materials and outside printing from gross turnover - eligibility for input deduction in photographic services - binding effect of prior Tribunal precedentsDeduction of cost of raw materials and outside printing from gross turnover - eligibility for input deduction in photographic services - binding effect of prior Tribunal precedents - Assessees engaged in photographic services are entitled to deduct the cost of raw materials and outside printing from gross turnover for the periods in dispute. - HELD THAT: - The Tribunal examined earlier decisions of the same forum and other Tribunals which had considered in detail whether inputs consumed in photographic services (including costs of raw materials and outside printing/job-work) could be deducted from gross receipts. Those decisions held that such inputs are eligible for deduction. The Bench observed that the contentions repeatedly raised by Revenue on this point have been addressed by the cited precedents and the question is no longer res integra. Having regard to the consistent Tribunal rulings, the Bench declined to take a contrary view, held that there was no merit in the impugned orders and set them aside, allowing the appeals with consequential relief. [Paras 5]Impugned orders set aside; appeals allowed and assessees entitled to the claimed deductions with consequential relief, if any.Final Conclusion: Appeals allowed; recovery set aside and appellants entitled to deduction of the cost of raw materials and outside printing for the specified periods in view of consistent Tribunal precedents. Issues:Deduction of cost of raw materials and outside printing from gross turnover in Photography Services.Analysis:The appeals involved a common issue of whether the appellants, engaged in Photography Services, were entitled to deduct the cost of raw materials and outside printing from their gross turnover. The Revenue sought to recover short payment of duty, arguing that such deductions were not permissible. The learned Counsel for the appellants cited a favorable decision in a similar case and argued for a similar disposal. The learned SDR, however, defended the Revenue's position, emphasizing that deductions could only be allowed for final goods sold, not consumables. The Counsel countered by citing various Tribunal judgments supporting the appellants' position, highlighting that the issue had been extensively considered and settled in favor of allowing the deduction for inputs used in photographic services.The Tribunal, after careful consideration of the submissions and the cited judgments, concluded that the issue was no longer open to debate. They noted that previous judgments had already established the eligibility of appellants to claim the deduction for inputs used in photographic services. The Tribunal found no merit in the Revenue's arguments and set aside the impugned orders, allowing the appeals with any consequential relief. The decision was pronounced and dictated in open court, bringing the matter to a close.