Works contract valuation allows different Rule 2A methods for separate service components when goods value is determinable and composite billing is not.

In a works contract, where repair and maintenance charges separately disclosed the value of parts, valuation had to be made under Rule 2A(i) because the goods component was determinable. For painting charges, where the value of paint was not separately ascertainable and the billing was composite, Rule 2A(ii)(B) applied. The rules do not prevent different valuation methods for distinct composite services merely because they appear in the same invoice. On that basis, the demand was unsustainable, and the impugned order was set aside.

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Issues: Whether the appellant was entitled to apply Rule 2A(i) of the Service Tax (Determination of Value) Rules, 2006 to repair and maintenance charges where the value of parts was separately shown, and Rule 2A(ii)(B) to painting charges where the value of paint was not separately ascertainable, even though the services appeared in the same invoice.

Analysis: The dispute turned on the valuation mechanism for works contracts under Rule 2A of the Service Tax (Determination of Value) Rules, 2006 read with section 67 of the Finance Act, 1994 and section 66E(h) of the Finance Act, 1994. The service provider had separately billed labour and parts for repair and maintenance, making the value of goods determinable, while the painting activity was billed on a consolidated basis without a separate ascertainment of paint value. The Rules do not prohibit adoption of different valuation methods for different composite services merely because they are reflected in the same invoice. Where the value of goods is determinable, valuation falls under Rule 2A(i); where it is not determinable, Rule 2A(ii)(B) applies. The same approach had already been accepted in the appellant's earlier matter on identical facts.

Conclusion: The appellant was entitled to adopt the respective valuation methods for the two categories of service, and the demand could not be sustained.

Final Conclusion: The impugned order was set aside and the appeal was allowed.

Ratio Decidendi: In a works contract, separately determinable goods value must be valued under Rule 2A(i), while composite services lacking such determinable value may be valued under Rule 2A(ii)(B); the Rules do not bar different valuation methods for different services merely because they are billed in the same invoice.

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