TaxTMI 
TaxTMI 
2024 (5) TMI 370
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...., Bhopal reported as 2011 (23) S.T.R. 608 (Tri.- LB), on this issue, in the context of photography service, held, inter alia, as under: Valuation (Service Tax) - Photography - Papers, consumables and chemicals used to bring photograph into existence - Recipient of photograph does not go to buy these items, does not make separate payments for them. He only expects photograph - In that view, fact that Notification No No. 12/2003-S.T. granted exemption of value of goods/materials used in production of photograph found to be immaterial, and value of photograph held to include all elements used to bring it to deliverable state - Service tax found to be leviable on gross value of photographic service, and more so as it is not a composite contract of sale of goods and service - In that view, Supreme Court decision in Surabhi Color Lab followed in Technical Color Lab departed from as it was found to be based purely on incorrect clarification issued by officer of CBEC, which furthermore, could not be relied on in law - Apex Court decision in C.K. Jidheesh [2006 (1)_S.T.R. 3 (S.C.)] followed, especially as several High Courts had given similar opinions - Section 67 of Finance Act, 1994. [....
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....that these case laws cannot be applied to this case and as such, there is merit in the present appeal of the Department. 4.4 Thus, I find that the respondent are liable to pay Service Tax (including Cesses) on the deduction of amount of Rs. 72,22,594/- (in lieu of the cost of medicines), alongwith interest, allowed by the Adjudicating Authority from the taxable value. Since they had not collected Service Tax from the service recipients on this amount, they are eligible for the cum-tax benefit under Section 67(2) of the Act, in respect of this amount. Thus, after taking into consideration that the Adjudicating Authority had wrongly allowed the benefit of the Notification No. 12/2003-ST dated 20.06.2003, 1 find that the Service Tax liability of the respondent for the impugned period, is Rs.7,49,474/-." 2. We have heard Shri Om Prakash Shukla, Advocate for the appellant and Shri Manish raj Authorized Representative for the revenue. 3. We have considered the impugned order along with the submissions made in appeal and during the course of arguments. 4. The decision of larger bench relied upon by the Commissioner (Appeals) in the case of M/s Aggarwal Colour Advance Photo System ha....
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....ed" including the cost of material, goods used/consumed minus the cost of unexposed film. The Larger Bench of the Tribunal answered the questions against the appellant vide order dated 11.08.2011 (Annexure A-5) and held that unless documentary proof indicating the value of goods and material is submitted, the benefit of the Notification would not be available to the assessee. The burden of proof was on the assessee to establish the value of the goods and material. The Larger Bench while answering the questions referred to it, came to the conclusion that the gross value of service rendered is liable to service tax, as no amount is paid separately for photography service and the goods used and consumed in providing such taxable service. The relevant findings read as under:- "21. Service tax law is not the law relating to commodity taxation. The Notification in question issued under that law seeks to achieve that end by exempting value of goods sold while providing taxable service. There is no doubt that papers, consumables and chemicals are used and consumed to bring photographs into existence. It is also quite true that no service recipient goes to a photography service provider t....
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....3 above are as follows:- (i) For the purpose of section 67 of the Finance Act, 1994, the value of service in relation to photography would be the gross amount charged including cost of goods and material used and consumed in the course of rendering such service. The cost of unexposed film etc., would stand excluded in terms of Explanation to section 67 if sold to the client. (ii) The value of other goods and material, if sold separately would be excluded under exemption Notification No.12/2003 and the term 'sold' appearing thereunder has to be interpreted using the definition of 'sale' in the Central Excise Act, 1944 and not as per the meaning of deemed sale under Article 366(29A)(b) of the Constitution." 23. On the aforesaid analysis of the legal position it can be said that determination of value of taxable service of photography depends on the facts and circumstances of each case as the Finance Act, 1994 does not intend taxation of goods and materials sold in the course of providing all the taxable services." In view whereof, the appeal of the appellant was also dismissed vide impugned order dated 07.06.2012 (Annexure A-6), however, the penalty was set aside. In this ma....
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....consumed during the provision of service, that are not available for sale, by the service provider would not be entitled to benefit under Notification No.12/2003-ST dated 20.6.2003." 12. There is no dispute to the proposition that the Notification does not override the statutory provision and hence, it is required to be seen as to whether the conclusion drawn by the Tribunal that term 'sold' appearing in Notification has to be interpreted using the definition of 'sale' in the Central Excise Act, 1944 and not as per the meaning of "deemed sale" under Article 366(29A)(b) of the Constitution, is correct or not. 13. From the aforesaid discussion, it would emerge that the crux of the substantial question of law No.1 which has arisen for consideration is: "whether for the purposes of service tax the value of photography service can be determined separately from the value of certain consumables and chemicals which are used on the paper for printing the image and whether such printed photograph can be said to be a sale of goods in terms of Article 366(29A)(b) of the Constitution". In this regard, before considering the first limb of the contention of learned counsel for the appellants ....
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....stitution where the element of goods can be separated, such contracts can be subjected to sales tax by the States under Entry 54 of List II of Schedule II. Once that is so, value of photographic paper and consumables cannot be included in the value of photography service for the purposes of imposition of service tax. Thus, in the light of the judgment of the Apex Court in M/s Pro Lab (supra), wherein it is held that part of processing and supplying of photographs, photo prints and negatives, which have "goods" component exigible to sales tax is constitutionally valid, it is held that value of photography service has to be determined in isolation of cost of goods such as photography paper, consumables and chemicals with which image is printed, negatives and other material which has "goods" component liable to sales tax. Accordingly, the substantial question of law No.1 is answered in favour of the assessee and against the Revenue. 20. Having answered the substantial question of law No.1 in favour of the assessee, the substantial question of law No.2, which already stands concluded while dealing with the question of law No.1, is also answered in favour of the assessee and it is he....