2013 (11) TMI 1306

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....les Tax law). The Revenue felt that there is undervaluation of the service under the head 'Management, Maintenance or Repair Service' and accordingly show-cause notice 6.10.2010 was issued as to why the value of materials consumed during the course of providing taxable service amounting to Rs.22,55,07,982/- for the period April 2009 to March 2010 should not be included in the gross value of service in terms of Rule 5 of the Service Tax (Determination of Value) Rules, 2006 read with Section 67 of the Finance and accordingly why not differential tax of Rs.2,25,50,798/- and penalties imposed. 2. Although the appellant contested the show-cause notice, but the demand was confirmed vide order in original dated 4.2.2011 passed by the Commission....

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.... transfer, delivery or supply and purchase of those goods by a person to whom such transfer, delivery or supply is made. He further emphasized that in the case of Imagic Creative Pvt. Ltd. vs. CCT: 2008 (9) STR 337 (SC), the Hon'ble Supreme Court had considered a similar issue under the Karnataka VAT Act whether the charges collected towards the services for creation of prototype conceptual design, on which service tax had been paid under the Finance Act, 1994 is liable to tax under the Karnataka Value Added Tax Act, was the question involved. The Hon'ble Court held that by insertion of Clause 29A in Article 366, a legal fiction was created so as to make the supply of goods involved in a works contract, subject to tax. The apex court held s....

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....able on the value of the entire contract; irrespective of the element of service provided. The approach of the assessing authority, to us, thus, appears to be correct. From the aforementioned law laid down by the Hon'ble apex court it is crystal clear that the job done by the appellant is in the nature of works contract and as because of transfer of materials like rubber, etc., are involved in the job work done and accordingly service tax is payable only on the service aspect of the transaction. 4. Reliance was also placed by the appellant on Almec Enterprises vs. CCE: 2013 (29) STR 21 (Bom.), Samtech Industries vs. CCE: 2013 (31) STR 16 (T) where it was held that material value on which VAT is paid cannot be added to value of taxable....