Separate invoicing of materials and service charges justified exemption for tyre retreading services, making the gross-value demand unsustainable.

Separate invoicing of material cost and service charges for tyre retreading services supported exclusion of the material component from taxable value under Notification No. 12/03-ST dated 20.01.2003. The invoices showed distinct values for tread rubber, red cement and chemicals as against service charges, and the original authority had accepted this split and excluded material cost from tax. The appellate reversal in ex parte proceedings did not displace that factual basis. On the record, the Tribunal held that the exemption benefit was available and the demand raised on the gross value was unsustainable.

---

---

Issues: Whether the appellant was entitled to exemption under Notification No. 12/03-ST dated 20.01.2003 in respect of the value of materials used and shown separately in the invoices while rendering tyre retreading services.

Analysis: The invoices placed on record showed separate values for materials such as tread rubber, red cement and chemicals and for service charges. The Original Authority had examined the documents and recorded a finding that the material cost reflected in the invoices was to be excluded from the taxable value under the notification. The appellate authority reversed that finding in ex parte proceedings without sustaining the factual basis accepted by the Original Authority. On the record before it, the Tribunal found that the appellant had established the split-up of material value and service charges and that the benefit of the notification was available.

Conclusion: The appellant was entitled to the benefit of Notification No. 12/03-ST dated 20.01.2003, and the demand confirmed on the gross value was unsustainable.

---