TaxTMI 
TaxTMI 
2011 (9) TMI 199
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....hether the value of paper, chemicals and other materials used by them is required to be added in the value of services being provided by them so as to make the entire gross amount charged by them from their clients leviable to service tax. The Commissioner (Appeals) has held in favour of the respondents by following the precedent decision of the Tribunal in the case of Shilpa Colour Lab vs. CCE, Calicut reported in [2007 (5) STR 423 (Tri-Bang)] as also in the case of Bharat Sanchar Nigam Ltd. vs. Union of India reported in [2006 (2) STR 161 (SC)] affirmed by Supreme Court as reported at [2009 (14) STR J 163 (SC)] and Adlab vs. CCE, Bangalore reported in [2006 (2) STR 121 (Tri)] affirmed by Karnataka High Court as reported at [2010 (18) STR J 85]. He has accordingly set aside the demand of duty against the respondents alongwith setting aside of penalties etc. The said order is impugned by Revenue. 3. After hearing both sides, we find that the issue on merits is no more res integra and stands settled in favour of the Revenue by the Larger Bench decision of the Tribunal in the case of M/s. Agrawal Colour Photo Industries vs. Commissioner, vide Misc. order No. ST /129/11 date....
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....rrected by the Tribunal by upholding the order of the adjudicating authority for the entire period. He draws our attention to the findings of the original adjudicating authority as regards the fact of suppression and non information of the crucial facts. As regards the appellants plea that the earlier judgements were in their favour and therefore, extended period would not be applicable, learned DR submits that the Apex Court decision in the case of C.K. Jidheesh cover the disputed issue and as such the respondents contention of conflicting orders on the issue is without merit. As regards the Board's circular, he submits that it stands observed by the Larger Bench in the case of Aggarwal Colour Advance Photo System that there was no such Circular issued by the Board and the same was only a letter of an officer without authority and without legs to stand on. The Hon'ble Supreme Court in the case of CCE, Bolpur vs. Ratan Melting & Wire Industries reported as [2008 (231) ELT 22 (SC)] has held that a circular contrary to law laid down by Supreme Court is a nullity. As such he submits that in the light of finding of Larger Bench, the letter issued by ....
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....s. - (2000) 2 SCC 385. This decision of the Apex Court, in sales tax matter, was overruled by the Apex Court in para 47 of Bharat Sanchar Nigam Ltd. Versus UOI-2006 (2) S.T.R. 161 (S.C.). "44. In Rainbow Colour Lab & Anr. v. State of M.P. & Ors. - (2000) 2 SCC 385, the question involved was whether the job rendered by the photographer in taking photographs, developing and printing films would amount to a 'work contract' as contemplated under Article 366 (29A)(b) of the Constitution read with Section 2(n) of the M.P. General Sales Tax Act for the purpose of levy of sales tax on the business turnover of the photographers. 45. The Court answered the questions in the negative because, according to the Court:- "Prior to the amendment of Article 366, in view of the judgment of this Court in State of Madras v. Gannon Dunkerley & Co. (Madras) Ltd. - (1958) 9 STC 353: AIR 1958 SC 560 the States could not levy sales tax on sale of goods involved in a works contract because the contract was indivisible. All that has happened in law after the 46th Amendment and the judgment of this Court in Builders, case (1989) 2 SCC 645 is that it is now open to the States to divide the works contra....
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....ion to evade payment of tax. In this context a careful reading of the decision in C.K. Jidheesh is required. Firstly, the major contention of the appellant in that case was that UOI was discriminating between persons providing services like photography services and those providing services like stock brokers, travel agents etc in the manner of computing taxable value of services. Secondly the dispute was in relation to a clarification dated 09-07-2001 issued by Finance Ministry in the matter. The decision also took into account the decision of the Apex Court in Rainbow Colour Lab v. State of M.P. - 2001 (134) E.L.T. 332 (S.C.). Notwithstanding these interpretations of law, the CBEC, albeit an official of CBEC, issued a clarification contrary to the legal position as explained in these sources vide letter dated 07-04-2004 addressed to Punjab Color Lab Association giving a different interpretation of law. If an official of CBEC was not aware of the correct legal position in the matter then the members of the public cannot be faulted for having acted in good faith relying on the said clarification dated 07-04-2004 issued by an official of CBEC. Further the Tribunal also took cog....
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....dgement by the Hon'ble Supreme Court laying down that such suppression or mis-statement has to be with 'an intent to evade payment of duty'. In other words, if such suppression or mis-statement, if any, is based upon the available information in the field or on the basis of precedent decisions of the higher authorities, the mere fact of non-providing information by itself, cannot be held to be a ground for invokation of longer period of limitation.The question required to be seen in the present appeal is as to whether such non-filing of information with the revenue as regards the cost of material used, while providing the services, was with a malafide design on the part of the assessee or was the result of bonafide doubt being entertained by him. As already discussed, various Tribunal's judgements holding in favour of the assessee as also the fact of letter issued by an officer of the Board to the Punjab Colour Lab Association are sufficient reasons for an assessee to entertain a view that such material cost is not required to form part of the taxable services. The adjudicating authority having not referred to any evidence indicating that such non-information was with a....