2018 (12) TMI 258

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....repairing/reshelling the old and worn out rollers of sugar mills. As the appellant is registered with the Service Tax Department under the said category they are paying service tax on the repair and maintenance charges including the cost for the new shell. During the course of such repairs of the old shells the roller is de-shelled completely and new shell is shrink fitted on the shaft. During such process of repairing, scrap is generated in the appellant's factory, which is being retained by them and recorded in the Statutory Books and cleared on payment of duty of excise. 2. On scrutiny of the appellant's records, officers found that they were discharging their service tax liability only on the job charges agreed with their customers. In....

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.... Determination of Value) Rule, 2006 which is to the following effect:- "Rule 3 of Service Tax (Determination of Value) Rules, 2006 lays down "Subject to the provisions of Section 67, the value of taxable service, where the consideration received is not wholly or partly consisting of money, shall be determined by the service provider in the following manner:- (a) the value of such taxable service shall be equivalent to the gross amount charged by the service provider to provide similar service to any other person in the ordinary course of trade and the gross amount charged is the sole consideration; (b) where the value cannot be determined in accordance with clause (a), the service provider shall determine the equivalent money value of ....

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....which is leviable to service tax. The appellants are being paid for the said service by their service recipient, in cash as also in kind. The payment in kind is equivalent to value of the scrap which the appellant has been allowed to retain. Taking a hypothetical situation where agreed upon charges between the appellant and their customer is Rs. 150/- per unit. However, on account of the retention of the scrap to the extent of Rs. 50/- value, the customers have paid only Rs. 100/- for the said services. Admittedly, in such scenario the payment made in cash to the extent of Rs. 100/- and in kind to the extent of Rs. 50/-, being the value of scrap is required to be considered as the value of the service. The fact of clearance of said scrap on....