2017 (1) TMI 1110

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....tion in this appeal is whether in a contract for retreading of tyres, service tax is leviable on the total amount charged for retreading including the value of the materials/goods that have been used and sold in the execution of the contract. 2. The definition of 'taxable service' contained in Section 65(105)(zzg) of the Finance Act, 1994, as amended by Finance Act, 2003 may be noticed at this stage. "65. Definitions In this Chapter, unless the context otherwise requires.-- * * * (105) 'taxable service' means any service provided- * * * (zzg) to a customer, by any person in relation to maintenance or repair;" 3. The expression "maintenance or repair" is defined by S....

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....June, 2003. 'Valuation (Service Tax) - Goods and materials sold by service provider to recipient of service - Value thereof, exempted. In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts so much of the value of all the taxable services, as is equal to the value of goods and materials sold by the service provider to the recipient of service, from the service tax leviable thereon under section (66) of the said Act, subject to condition that there is documentary proof specifically indicating the value of the said goods and materials. 2. This notification shall come into....

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....rvice of "Maintenance and Repairs". b) "Maintenance and Repair Service" being as specific service cannot be treated as service under the category of "Works Contract" for the service tax purposes. c) The concept of "deemed sales" is relevant only in respect of services under the category of "Works Contract" and not in respect of "Maintenance and Repair Service". d) The assessee has not proved that the conditions under Notification 12/03 ST dated 20.06.2003 have been satisfied and, therefore, they are not entitled to the benefit of deduction of cost of raw materials consumed in providing the impugned service." 8. Aggrieved, this appeal has been filed. 9. We have heard the learned counsels for the parties. 1....

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.... 11. An argument has been advanced by Ms. Pinky Anand, learned Additional Solicitor General that there is no evidence forthcoming from the side of the assessee that the value of the goods or the parts used in the contract and sold to the customer amounts to seventy per cent (70%) of the value of the service rendered which is the taxable component under the State Act. The aforesaid argument overlooks certain basic features of the case, namely, the undisputed assessment of the assessee under the local Act; the case projected by the Department itself in the show cause notice; and thirdly the affidavit filed before this Court by one S. Subramanian, Commissioner of Central Excise, Salem. 12. No dispute has been raised with regard to the ass....

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....had paid service tax only on the labour component after deducting 70% towards material cost on the gross tyre Retreading charges billed and received for the period from 16.06.2005. In short, they have paid service tax only on the 30% of the tyre Retreading charges received from the customers, by conveniently omitting 70% of the consideration received towards Retreading charges to avoid tax burden. The verification of invoices of the Appellant for the period from Jan-2007 to March-2007, the officers noticed that the Appellant have shown material cost, patch cost and misc. charges i.e. Labour charges separately in their invoices. However, on the follow-up action the customers of the Appellant revealed that they have neither purchased....