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of <h1>CESTAT Ahmedabad: Service tax only on service component of retrading tires, material costs excluded.</h1> <h3>M/s Shreehari Retreads Versus C.C. -Ahmedabad</h3> M/s Shreehari Retreads Versus C.C. -Ahmedabad - TMI Issues Involved:1. Appeal against Order-in-Appeal No. 10/2009/STC/HKJ/COMMR-A-/AHD2. Requirement of service tax on the value of raw material used in retrading of tires in addition to service tax collected on retrading serviceAnalysis:1. The appeal before the Appellate Tribunal CESTAT Ahmedabad was against Order-in-Appeal No. 10/2009/STC/HKJ/COMMR-A-/AHD issued by the Commissioner (Appeals) Ahmedabad.2. The central issue in this appeal was whether the appellant was obligated to discharge service tax on the value of the raw material used in the retrading of tires along with the service tax already collected on the retrading service itself.3. The appellant's Chartered Accountant argued that the matter was settled by a judgment of the Hon’ble Supreme Court in the case of Safety Retrading Co. (P) Ltd. vs CCE Salem 2017 (48) STR 97 (SC). The argument was based on the premise that since the appellant was already paying VAT/Sales Tax on the material used for tire retrading, its value should not be included in the taxable value of the retrading service for service tax purposes.4. The Revenue's representative reiterated the findings of the Commissioner (Appeals) during the proceedings.5. The Tribunal noted that the issue was indeed covered by the Supreme Court's judgment in the Safety Retrading Co. case. The Supreme Court's observations emphasized the importance of Section 67 of the Finance Act, 1994, which deals with the valuation of taxable services for service tax purposes. The Court highlighted that the cost of parts or materials sold during maintenance or repair services should be excluded from the taxable value. The Tribunal found that the appellant was liable to pay tax only on the service component, as quantified under the State Act.6. Based on the principles enunciated by the Supreme Court, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant.This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, and the legal principles applied by the Appellate Tribunal in reaching its decision.
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