Separate sale of spare parts may support exclusion from taxable value when invoices and tax payment evidence are produced

Value of spare parts used in maintenance and repair services may be excluded under Notification No. 12/2003-ST where the supplier can show separate sale and that VAT or sales tax was paid. The Tribunal noted that the appellant claimed to have bills and invoices supporting such separate supply, while the adjudicating authority had accepted eligibility in principle but rejected the claim for lack of evidence. The matter was remanded so the appellant could produce the supporting invoices and bills, and the claim could be reconsidered on that material.

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Issues: Whether the value of spare parts used in providing maintenance and repair service could be excluded from the taxable value under Notification No. 12/2003-ST, and whether the appellant should be given an opportunity to produce supporting invoices and bills.

Analysis: The appellant rendered maintenance and repair services for computers and claimed that spare parts were supplied separately to customers and that such parts suffered VAT or sales tax, thereby making the value deductible under Notification No. 12/2003-ST. The adjudicating authority had observed that the appellant was in principle eligible for the benefit of the notification, but denied it for want of documentary evidence. The Tribunal noted that the appellant asserted possession of bills and invoices to establish separate sale of spare parts and the levy of VAT or sales tax. In the interest of justice, the appellant was to be afforded an opportunity to produce such evidence before the adjudicating authority.

Conclusion: The matter was remanded to the adjudicating authority for fresh consideration of the claim under Notification No. 12/2003-ST after allowing the appellant to adduce evidence.

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