TaxTMI 
TaxTMI 
2012 (9) TMI 704
X X X X Extracts X X X X
X X X X Extracts X X X X
....cede that such charges were recovered irrespective of the fact whether spare parts were actually supplied or not, because according to them maintenance and repair charges were fixed on average basis taking into consideration the life of the dumper and life of spare parts. 2. Revenue was of the view that the appellants should have paid service tax for the consideration received under the contract for maintenance and repair after claiming exemption for value of materials sold, if any, as per the provisions of Notification No. 12/2003-ST dated 1.3.2003. Revenue found that the consideration charged for maintenance and repair service was in excess of the price of the materials sold. Therefore Revenue was of the view that there was a short levy of service tax during the financial year 2009-10. Revenue issued a Show Cause Notice and after due process of law a demand for Rs.77,19,688/- has been confirmed along with interest and penalty. Aggrieved by the order of the Commissioner, the appellants have filed this appeal before the Tribunal along with an application for waiver of pre-deposit of dues arising from the impugned order for admission of the appeal. 3. During the impugned perio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....14 *Sales Tax has been paid on this value Phase-II of the Contract Year Spare Parts Supply Charges recovered Value of Spare parts actually consumed (calculated at regular list price) Differential Value (in Rs.) (1) (2) (3) 4=(2)-(3) 1 (2007-08) 2,50,08,542 1,05,35,604 1,44,72,938 2 (2008-09) 6,12,79,910 3,99,36,915 2,13,42,995 3 (2009-10) 8,93,36,925 4,86,93,432 4,06,43,493 4 (2010-11) 5,41,28,411 8,87,83,334 -3,46,54,923 5 (2011-12) 4,64,59,433 6,60,12,253 -1,95,52.820 Total 27,62,13,221 * 25,39,61,538 2,22,51,683 *Sales Tax has been paid on this value 5. He also relies on the following decisions of the Tribunal in support of his argument that once VAT is paid there cannot be any service tax liability on the corresponding value:- (1) Wipro GE Medical Systems Pvt. Ltd. Vs. CST, Bangalore - 2009 (14) STR 43 (Tri.-Bang.) (2) Xerox Modicorp Ltd. Vs. State of Karnataka - 2005 (142) STC 209 (SC). 6. The rely on the following decisions and argue that a contract should be understood as per the intentions of the parties: (1) M/s Xelo Pvt Ltd. Vs. DDIT (2) Unio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he impugned contract is that of Repair and Maintenance. It is not for sale of parts. The primary responsibility undertaken under the contract is to keep the machines in working condition. So going by the aspect theory laid down by Apex Court in the case of BSNL Vs. UOI- 2006 (2) S.T.R. 161 (S.C.) this contract cannot be considered as anything other than a service contract. He accepts that if there is any sale of goods made for providing service, the value of goods sold is exempt from payment of service tax by Notification 12/2003-ST. He points out that the demand is made only after extending the benefit of such exemption adopting the list price of the goods as per para 6 of the impugned order. In fact the actual value for such parts will be much lower considering that the spare parts are procured in bulk from the manufacturers by the appellants. He also points out that on items like tool kit cannot be considered to be sold because these are items used by the appellant and property in such goods may not be transferred to the service recipient. 10. The Ld. AR points out that the decision in Wipro Medical Systems is with reference to the facts of the case where the value of goods s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the contract it is very clear that the contract is for providing services though appellant had an intention to pay VAT on the consideration received rather than service tax. The decisions do not say that tax liability can be discharged as per of option of the parties. The matter will have to be decided by law that is applicable. We also note extracts from para 5 of the order of the Apex Court in the case of Mahindra and Mahindra Ltd. Supra reading as under: "Ordinarily the Court should proceed on the basis that the apparent tenor of the agreements reflect the real state of affairs. It is, no doubt, open to the revenue to allege and prove that the apparent is not the real and that the price for the sale of the CKD packs is not the true price, and the price was determined by reckoning or taking into consideration the lumpsum payment made under the collaboration agreement in the sum of 15 million French Francs. The short question is whether the revenue has succeeded in showing that the apparent is not the real and that the price shown in the invoices does not reflect the true sale price and so section 14(1)(b) of the Act was properly invoked." Prima facie this is a case where Re....