2026 (4) TMI 673

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....eturns regularly. It's records were audited by officers of the Central Excise Audit Commissionerate, Jaipur who found that the appellant was carrying out repair maintenance and also painting automobiles and was often issuing a single invoice for the job. 2. On repair and maintenance services, the appellant had paid service tax on the full value of the labour charges as per Rule 2A (i) of the Service Tax (Determination of Value) Rules, 2006 [Valuation Rules] and charged the cost of the parts separately. For painting, the appellant paid service tax on the painting charges under rule 2A (ii) (B) of the Valuation Rules on 70% of the cost of painting (including the cost of paint). 3. Audit took a view that in the same invoice, the appellan....

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....tion in the execution of a works contract referred to in clause (h) of section 66E of the Act, shall be determined in the following manner, namely:- (i) Value of service portion in the execution of a works contract service shall be equivalent to the gross amount charged for the works contract less the value of property in goods transferred in the execution of the said works contract. Explanation. - For the purposes of this clause,- (a) gross amount charged for the works contract shall not include value added tax or sales tax, as the case may be, paid or payable, if any, on transfer of property in goods involved in the execution of the said works contract; (b) value of works contract services hall include,....

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....al works, service tax shall be payable on forty per cent. of the total amount charged for the works contract: (B) in case of works contracts, not covered under sub-clause (A), including works contract entered into for, - (i) Maintenance or repair of reconditioning or restoration or servicing of any goods ; or (ii) maintenance or repair or completion and finishing services such as glazing or plastering or floor and well tiling or installation of electrical fittings of immovable property, Service tax shall be payable on seventy percent of the total amount charged for the works contract. Explanation1-for the purposes of this rule,- (a) "original works" means ......... (b) "total am....

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....e 2B must be adopted. The Rules nowhere stipulate as to how the contracts should be drawn up or agreed to. The service provider and service recipient can enter into whichever type of contract they want to. The appellant had billed separately showing the cost of parts for repair and maintenance and has correctly adopted Rule 2A(i) to determine the value. For painting it did not charge a separate amount for paint and the service of painting and charged a consolidated amount and hence it was not covered by Rule 2(A) (i) and hence it adopted Rule 2(B) (ii) of the Valuation Rules. Such a method of valuation has been upheld by this Tribunal in Final Order dated 2.5.2025 in respect of the same appellant. Relevant portion of the order is reproduced....