TaxTMI 
TaxTMI 
2008 (8) TMI 207
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....: Sl. No. Appeal No. Order-in- Original No. Amount involved Service Tax (Rs.) Penalty (Rs.) 1. ST/367/2007 68/2007, dated 25-6-2007 3,03,77,607 200 per day u/s 76 1,000 under section 77 4,00,00,000 under section 78 2. ST/ 113/2006 7/2006, dated 30-1-2006 3,03,77,607 200 per day under section 76 1,000 under section 77 4,00,00,000 under section 78 2. Mr. G. Shiva Dass, the learned Advocate, appeared on behalf of the appellants and Ms. Sudha Koka, the learned SDR, for the revenue. 3. We heard both sides. 4. The appellants undertake installation of various medical equipments. They enter into Annual Maintenance Contract with....
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....s provisions of the Finance Act, 1994. 5. The learned Advocate for the appellants invited our attention to section 67 of the Valuation Rules which provide as to how the services have to be valued for purposes of service tax. Our attention was invited to the provision which states that the value does not include the cost of the parts or other materials if any sold to the customers during the course of providing maintenance or repair service. Therefore, they had taken 70 per cent abatement on the gross receipt and they have also stated that on the 70 per cent, they had paid sales tax. They have given all the evidences before the authorities. However, the Commissioner, Service Tax has not accepted the same. The main contention of the appell....
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....or repair. Further, it was submitted that the Hon'ble High Court of Karnataka in the case of Modi Xerox Ltd. v. State of Karnataka 1999 (114) STC 424 has held that during the course of providing maintenance service in Annual Maintenance Contract the supply of materials can be considered as sale and this position has been affirmed by Supreme Court in 2005-(ST3)-GJX-0143-SC. Therefore, it is now settled law that even during the course of maintenance there is a sale of goods. Our attention was also invited to the Notification No. 12/2003, dated 20-6-2003 issued by the Government which recognizes the fact and exempts the value of materials sold during provision of a service. (ii) Reliance was placed on the decision of this Bench in the c....
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....hile calculating the Works Contract. This is the reason for the appellants to adopt the ratio of 70:30 for the payment of service tax. It is now settled law that once an amount suffers sales tax, service tax cannot be demanded on the same amount. The following case laws were relied on: (a) Bharat Sanchar Nigam Ltd. v. Union of India [2006] 3 STT 245 (SC). (b) Imagic Creative (P.) Ltd. v. Commissioner of Commercial Taxes [2008] 12 STT 392 (SC). (c) BPL Mobile Communications Ltd. v. CCE [2007] 8 STT 416 (Mum.-CESTAT). (d) ASL Motors (P.) Ltd. v. CCE, C&ST [2008] 17 STT 83 (Kol.-CESTAT). (v) It was also stated out of the total turnover of Rs. 49,47,95,474, the appellants had received only Rs. 30,17,97,929. Taking this into consi....
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.... annual maintenance and the consideration received is only for the maintenance and repair. The replacement of spare parts is only incidental and there is actually no sale of the goods involved. Therefore, she supported the order-in-original and stated that the Order of the Commissioner is in accordance with law and the appellants are liable to pay service tax on the gross receipts. She also invited our attention to the Commissioner's order wherein he has relied on the Board's circular dated 3-3-2006 according to which the appellants could have availed of the abatement only after producing the documentary evidence She stated that there is actually no documentary evidence for the abatement claimed. This 30 per cent : 70 per cent appea....
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....Ltd.'s case (supra) it has been clearly held that in the Annual Maintenance Contract, the replacement of spares etc. would be considered as sale. Even in the present case, on 70 per cent of the value sales tax has been paid and this has been accepted by the Government of Karnataka. This fact also cannot be ignored. Moreover, Notification No. 12/2003, dated 20-6-2003 clearly provides for exempting the value of the materials sold during the provision of the service. Whenever, any service is provided if in the course of the provision of the service certain materials are used they will definitely be considered as sale. This is clearly covered by the Constitutional article 366(29)(B) cited by the learned Advocate. We do not agree with the le....