2010 (2) TMI 457 - AT - Service Tax

Supreme Court clarifies service tax valuation for photography services, remands case for reevaluation

Central Studio & Colour Lab Versus Commissioner of Central Excise, Calicut

The appeal challenged the correct valuation for service tax liability under photography services. The Supreme Court clarified that material costs should ... Photography Service - The issue involved in this case is regarding the correct value to be ascertained for the purpose of liability of service tax under the category of photography services. Revenue denied said deduction on ground that assessee had not maintained any record of consumption of said material. Held that - in the light of the decision of CCE & C v. Central Studio & Colour Lab, where it was held that while discharging liability of service tax on photography services, cost of material has to be allowed as deduction for arriving gross value for discharging service tax liability. Thus, matter was to be remanded to adjudicating authority to consider issue in light of above decision. Issues involved: Correct valuation for service tax liability under photography services category.Analysis:The appeal challenges Order-in-Appeal No. 140/2006-ST, dated 16-6-2006, regarding the correct valuation for service tax liability under photography services. The appellant deducted material costs from the gross value to determine the liability, while the revenue argued against this deduction due to lack of maintained records on material consumption. The Hon'ble Supreme Court's decision in CCE & C v. Central Studio & Colour Lab clarified that material costs should be deducted when determining the gross value for service tax liability. However, the appellant's claim regarding material costs was unverifiable due to lack of separate accounts for materials used. The Tribunal, considering the importance of factual records, set aside the impugned order and remanded the matter to the adjudicating authority. The authority was directed to reconsider the issue in light of the Supreme Court decision and verify any records provided by the appellant, ensuring principles of natural justice are followed. The appellant was instructed not to seek adjournments during the authority's decision-making process. The appeal was allowed by way of remand for further assessment.This detailed analysis highlights the key legal aspects of the judgment, including the interpretation of valuation for service tax liability under photography services, the relevance of maintaining records for material costs, the impact of the Supreme Court's decision on deductions, and the procedural instructions for remanding the matter to the adjudicating authority for reconsideration.