2017 (9) TMI 710

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...., commissioning or installation services, management, maintenance or repair services and Business Auxiliary services. On the basis of specific intelligence, the department investigated the respondent regarding registration with the department while they were engaged in rendering various services but were not paying service tax on the value of such taxable services provided to customers. On completion of investigation, show cause notice dated 19.10.2012 was issued to the appellants proposing demand of service tax amounting to Rs. 1,08,05,578/- along with interest. Penalties were also proposed under various sections of the Finance Act, 1994. After due process, the adjudicating authority passed the impugned order in which service tax demand am....

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.... for such cases have been provided free of cost and since VAT has been paid by the respondent in respect of such contracts on the full contract value. Revenue's argument in appeal is that in respect of such composite contracts which have the service element, service tax is required to be levied on the such value of taxable service. If the respondent has paid the VAT by mistake on such service component, the same cannot be the reason for dropping the service tax demand. (ii) In respect of management, maintenance and repair service, the adjudicating authority has reduced the demand from Rs. 8,93,292/- made in the show cause notice to Rs. 6,68,521/-. Such reduction has been ordered by taking a view that the correct service tax liability whe....

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....ld as part of the contract. In respect of the contract in question, he has further recorded that respondent has paid the VAT in respect of entire contract value, notwithstanding the fact that certain element of service is part of the contract. He has dropped the service tax on such contract by also referring to CBEC Circular No.62/11/2003-ST dated 21.8.2003. This circular has clarified that the goods portion of work contract is to be ascertained from the payment of VAT and after deducting such value attributable to goods, the balance is to be determined as value of service. In cases where VAT has been paid on the full value of the contract, there is no value attributable to service and consequentially no service tax is payable. The findi....