Composite supply tax treatment: service tax on manufactured goods with incidental installation was held unsustainable after excise duty payment.

Composite invoices covering manufactured electronic safety equipment and installation/commissioning were examined under excise and service tax law. The record showed that manufacture was the taxable event under central excise and duty had already been paid on the full composite value, while installation was only incidental to the sale and supply of goods. On that basis, a further service tax demand on the same value was not sustainable, and the Commissioner's adjustment against the service tax demand could not survive. The matter was therefore decided in favour of the assessee, with the impugned order set aside and relief granted.

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Issues: Whether service tax was payable on the composite value of manufactured electronic safety equipment supplied with installation and commissioning, and whether the excise duty already discharged could be adjusted against the service tax demand.

Analysis: The composite invoices covered both manufacture and installation. The manufacturing activity was a taxable event under central excise and had already suffered duty on the entire amount. The demand of service tax proceeded on the footing that installation was the predominant element, but the record showed that the installation was only incidental to the sale and supply of manufactured goods. A further demand of service tax on the same composite value, while ignoring the excise duty already paid, was not supportable under the applicable fiscal scheme. The prior order in the assessee's own case on similar facts also supported the same view.

Conclusion: The demand of service tax on the composite value was not sustainable, and the adjustment made by the Commissioner could not survive. The issue is decided in favour of the assessee.

Final Conclusion: The impugned order was set aside and the appeals were allowed with consequential relief.

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