TaxTMI 
TaxTMI 
2022 (4) TMI 426
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....ted at 2009(14) STR J163 (SC). He also relied upon various other judgments including the judgment of Jain Brothers Vs. CCE, Bhopal [2009(13) STR 633 (Tri. Del.)] which was upheld by the Hon'ble Supreme Court reported at. 2012(28) STR J62 (SC). He also placed reliance on the following judgments:- i. Savithri Digital lab Vs. CCE, Coimbatore [2009(16) STR 462 (Tri. Chennai) - Affirmed by the Hon'ble Supreme Court reported at Commissioner Vs. Savithri Digital Lab [2011(24) STR J25(SC)]. ii. Adlabs Vs. CCE, Bangalore [2006(2) STR 121 (Tri. Bang.)] - Department appeal dismissed by Hon'ble Supreme Court reported at Commissioner Vs. Adlabs [2011(23) STR J27 (SC)] iii. CCE&ST, Mangalore Vs. Classic Color Lab [2018(8) TMI 1113 - CESTAT, BANGALORE] iv. CCE, Indore Vs. Photo Fast Colour Lab [2015(12) TMI 19 - CESTAT, NEW DELHI v. Agarwal Colour Advance Photo System Vs. CCE&ors. [2020(4) TMI 799 - Madhya Pradesh High Court] vi. Waidhan Engineering & Industries Pvt. Ltd. Vs. CCE [2020(4) TMI 867 - Madhya Pradesh High Court] He submits that in view of the above settled position, the present appeal is deserved to be allowed. 3. Smt. C.V. ....
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....rcular, in favour of the assessee, is retrospective in application as held by the Hon'ble Calcutta High Court in the case of Birla Jute and Industries Ltd. v. ACCE - 1992 (57) E.L.T. 674 (Cal.) (vii) The decision of this Bench in Adlabs case (cited supra), is in favour of the appellant. (viii) The Apex Court, in the case of BSNL (cited supra) has held that once it is possible to bifurcate in any transaction the sale or the service portion, the respective Tax is to be levied on the respective portions only. (ix) In the following decisions, it has been held that in the process of consumption of various chemicals, there is indeed a transfer of property from the service provider to the customer. (a) Commissioner of Sales Tax v. Matushree Textile Ltd. - 2003 (132) STC 539 (Bombay) (b) Live Tone v. State of Tripura and Others - 2001 (122) STC 0115 (Gauhati) (c) Xerox Modicorp Ltd. v. State of Karnataka - 2005 (7) SCC 380 (x) The circular issued in March 2006 denying the benefit conferred by earlier Circular can be having only prospective effect. (xi) The demand of Rs. 31,04,826/- is on account of the Service Ta....
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....- 8. We have gone through the records of the case carefully. The main issue in all these appeals relates to the valuation of Photography Services. Section 65 (zb) of the Finance Act defines Photography Services as "Services rendered to a customer, by a photography studio or agency in relation to photography, in any manner." Section 68(78) and (79) of the Finance Act are reproduced below:- "(78) "photography" includes still photography, motion picture photography, laser photography, aerial photography or fluorescent photography; (79) "photography studio or agency" means any professional photographer or a commercial concern engaged in the business of rendering service relating to photography." 8.1 Although the fact that the appellants render photography services which comes within the ambit of Finance Act, 1994 for levy of Service Tax is not in doubt, Shri Saju K. Abraham, the learned Chartered Accountant, appearing for M/s. Surabhi Colour Lab, urged the point that his client M/s. Surabhi Color Lab undertakes printing photograph of various sizes and this should not be considered as rendering any service for the reason that the material cost in prin....
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....tain clarifications and there is a Notification also. Let us examine them:- 8.3 The following Notification 12/2003-ST dated 20-6-2003 is very relevant for the present appeals and hence, the same is reproduced below: 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 force on the 1st day of July, 2003. [Notification No. 12/2003-S.T, dated 20-6-2003] In terms of the above Notification, the value of the goods and materials sold by the Service provider to the recipient of the service is to be exclud....
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....s/bills issued to the customers. The reasoning given by the Commissioner is not sustainable. In view of the clarification given in the Board's letter and the Notification itself the denial of benefit by the lower authorities is not justified and not correct in law. The appellants are eligible for the benefit of deduction in terms of the Board's circular and the Notification. The order passed by the impugned authorities is not correct in law as the same is contra to the Board's letter and the Notification. The impugned order is set aside by allowing the appeal." Though the above decision is in favour of the appellants, the Principal Bench, Delhi took a contrary view in M/s. Laxmi Color (P) Ltd. v. CCE, Jaipur-II. While taking a contrary view, CESTAT, Delhi relied on the following decisions:- (i) C.K.-Jidheesh v. UOI - 2006 (1) S.T.R. 3 (S.C.) = 2005 (71) RLT 505 (S.C.) (ii) Rainbow Colour Lab. & Anr. v. State of MP. & Ors. - 2001 (134) E.L.T. 332 (S.C.) = 2000 (2) SCC 385. 8.6 In order to appreciate the issues, we shall examine the decision in the case of Rainbow Colour Lab. The Rainbow case relates to Sales Tax. The Madhya Pradesh Sales tax autho....
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....sh decision. Thus, it appeared that the entire issue has been finally settled in view of the decision of the Apex Court in the Jideesh case. But, that was not to be, in view of further developments overruling the above decisions. 8.9 The learned Advocates brought to our notice that the Hon'ble Apex Court, in the Bharat Sanchar Nigam Ltd. & Anr. v. UOI & Ors.- 2006 (2) S.T.R. 161 (S.C.), has overruled the decisions in the case of C.K. Jidheesh and Rainbow Colour Lab cases. In order to appreciate the implications of BSNL decision to the present appeals, we like to present the following background information:- 8.10 The issue before the Apex Court was the nature of transaction by which mobile phone connections are enjoyed. In other words, it was to be decided whether the transaction is a sale or service or both? Only the States is competent to levy Sales Tax. As regards Service Tax, the Centre alone is competent in view of the constitutional provisions. BSNL maintained that the transaction is purely service and the Union Government supported that stand. However, the States contended that the transaction was a deemed sale and Article 366(29A)(d) of the Consti....
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.... a works contract; (c) a tax on the delivery of goods on hire-purchase or any system of payment by installments; (d) a tax on the transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration; (e) a tax on the supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration; (f) a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made; We find that Clause (b) covers cases relating to works contract. The problem created by Gannon Dunkerly decision was overcome and, therefore, transfer of ....
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.... 46. This conclusion was doubted in Associated Cement Companies Ltd. v. Commissioner of Customs - (2001) 4 SCC 593 saying:- "The conclusion arrived at in Rainbow Colour Lab case [(2000) 2 SCC 385], in our opinion, runs counter to the express provision contained in Article 366(29-A) as also of the Constitution Bench decision of this Court in Builders Assn. of India v. Union of India - (1989) 2 SCC 645". 47. We agree. After the 46th Amendment, the sale element of those contracts which are covered by the six sub-clauses of Clause (29A) of Article 366 are separable and may be subjected to sales tax by the States under Entry 54 of List II and there is no question of the dominant nature test applying. Therefore when in 2005, C.K. Jidheesh v. Union of India - (2005) 8 SCALE 784 held that the aforesaid observations in Associated Cement (supra) were merely obiter and that Rainbow Colour Lab (supra) was still good law, it was not correct. It is necessary to note that Associated Cement did not say that in all cases of composite transactions the 46th Amendment would apply. From the above, it is very clear that the apex Court has overruled the decisions in ....
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....icular legislature may in another aspect and for another purpose fall within another legislative power. They might be overlapping; but the overlapping must be in law. The same transaction may involve two or more taxable events in its different aspects. But the fact that there is overlapping does not detract from the distinctiveness of the aspects." The Apex Court observed that the Kerala High court in the Escotel case erred in including the cost of the service in the value of SIM card by relying on the aspects doctrine. They had categorically answered that the aspect theory would rot apply to enable the value of the services to be included in the sale of goods or the price of goods in the value of services. The implication of the above decision for the present case is that in the services relating to photography, if certain goods and materials are consumed, then the value of those goods and materials cannot be included in the value of the services for levy of Service Tax. In the result, the decision of this Tribunal in the Adlabs case is correct and legal in the light of the Apex Court's decision in BSNL case. Hence, we allow the appeals with consequential relief if any. We also ob....
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.... in the light of the law laid down by the Supreme Court in BSNL case, the matter has to be reconsidered de novo by the authorities below. 17. One issue which we may deal with relates to limitation. According to the appellant, the impugned demands have been confirmed invoking the extended period of limitation, but as the appellants did not commit any fraudulent act nor suppressed any information from the Department much less with intention to evade the service tax, the non-payment, if any, by reason of non-inclusion of the value of the sale portion of the contract, that is, the non-disclosure of the gross total amount including the value of the materials, was on account of bona fide belief that service tax liability relates to the service part of the contract which has already been discharged by the appellants as per Notification No. 12/2003-S.T. The case of the Revenue, on the point of limitation, on the other hand, is that the non-inclusion of the value of photography materials in the value of the taxable service was deliberate with intent to evade service tax. In view of our conclusion on the main dispute as to inclusion of the value of materials in the total value of ta....