TaxTMI 
TaxTMI 
2024 (6) TMI 584
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....rvice was classifiable under Maintenance or Repair Service. The respondent was paying service tax after availing the benefit of exemption Notification No. 12/2003-ST dated 20.06.2003. According to department, in the instant case, the goods i.e. replacement were used by the respondent for completion of service and such goods were neither available with him for sale in open market nor M/s. PGVCL purchased such goods without reference to the work order. Hence it appeared that the benefit of said Notification is not available to the respondent and the service tax short paid to the extent of the value of goods and materials consumed during the provisions of service during the period 2009-10 to 30.06.2012 is liable to be recovered. Further with effect from 01.07.2012 the said service was classifiable under 'Works Contract Service'. Rule 2A(1) of the Service Tax Valuation Rules, 2006 provides determination of value of service portion in execution of works contract as equivalent to gross amount charged for works contract less value of property in goods transferred in execution of said works contract. The department alleged that the said rule was not applicable as separate bills for labour ....
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.... the assessee and M/s PGVCL which prescribes the rate of goods and materials and accepted the same as sufficient documentary proof indicating the value of goods and materials sold by the assessee. The adjudicating authority has not carried out any verification to ascertain whether the cost of retained goods had any impact on the value of labour charges as alleged in the SCN. The adjudicating authority has erred in simply drawing an inference that the value of retained goods did not have any impact on the value of service. Such conclusion based on assumption and presumption has no legal sanctity. 5. He further submits that for the period 01.07.2012 to 2013-14, the adjudicating authority has determined the value under Rule 2A(i) of the Valuation Rules by relying on Explanation (c) to the said Rule which states that the value on which VAT or sales tax has been paid or payable on the actual value of goods transferred in the execution of works contract, shall be adopted as value of property in goods transferred in execution of said works contract for determination of value of service portion. Rule 2A of the Service Tax (Determination of Value) Rules, 2006 provides for determination of ....
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.... sample invoices issued by the respondent and contracts entered into by the respondent with his client. During the course of repairs, Respondents are replacing Coil, Transformer Oil and other items. They are paying Service Tax only on Labour Charges whereas it is contention of Revenue that Respondent should pay Service Tax on entire cost including of all the goods which are used in repair and Respondents are also not eligible for benefit of exemption Notification 12/2003, dated 20-6-2003 since there is no documentary proof. On going through contract, it is noticed that contracts described the rate of each item of works. Further the invoices issued by the respondent clearly shown that the VAT has been paid by the Respondents on cost of materials which are used in repair & maintenance. We find that the Notification No. 12/2003-Service Tax dated 20-6-2003 provides as under: "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 servi....
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....for determining the value of works contract service under this clause. From the perusal of above Rule2A, it will be evident that in respect of the 'works contract' it provides for the determination of the assessable value (i.e. the value of taxable service) by excluding - (i) the value of transfer of property in goods involved in the execution of the said works contract. (ii) Value Added Tax (VAT) or sales tax, as the case may be, paid, if any, on transfer of property in goods involved in the execution of the works contract. The explanation (c) of the Rule 2A(i) very clearly provides that value adopted for the purpose of payment of VAT shall be taken as the value of property in goods transferred in the execution of the said works contract for determination of value of service portion in the execution of works contract. 10. We find that the essence of the above rule is exactly the same as that of Notification No. 12/2003-ST. Hence looking to the facts of the case present case and also documentary evidence produced by the respondent we don't find any merit in the allegation of the revenue. 11. We have seen that invoices raised by the respondent, where the value of the goods/....