2015] 55 taxmann.com 274 (Bangalore- CESTAT)-Shirdi Sai Electricals Ltd. vs. Commissioner of Central Excise, Customs & Service Tax, Bangalore

Facts:
Appellant, a registered ser Stay – In the absence of any indication, mere use of the expression,
“inclusive of taxes” in the contract does not mean that tax is
collected from customer.vice provider of Management, Maintenance or Repair Service and Erection, Commissioning and Installation service discharged service tax on service portion of contract. The department demanded service tax on the entire contracted value including value of material, as the rates collected as per the contract were inclusive of all taxes. During adjudication Appellant relied upon Notification No. 45/2010 ST and Notification No.12/2003-ST to contend that, service of distribution of electricity was exempt upto 21-06-2010 and that value of material is not to be added in computation of service tax. Copies of VAT paid documents were duly submitted to justify that service tax is not applicable on the value of material. However, on the single ground of non-disclosure of material value in the ST-3 returns the authority contended that service tax is to be paid on the entire contracted value.

Held:
The Tribunal observed that the rates collected in the contract were inclusive of all taxes and there was nothing in the said contract to suggest that service tax was separately charged by the appellant from their customers. It was held that, the expression “inclusive of taxes” only means that there would be no further rise in the value of the contracts in case any demand stands raised against the service provider by the Revenue. In absence of any indication that service tax stands collected by the appellant from their customers, the above observation of the adjudicating authority cannot be appreciated. As regards, non-inclusion of value of material in discharging service tax, the Tribunal observed that Contract Value clearly reflected value of material and service separately and that copies of the VAT documents showing that VAT stands paid by them in respect of such materials is also on record. It was further held that mere non-mention of the Notification in the ST-3 Returns, does not give a reason to deny the benefit of the same, without otherwise examining the applicability of Notification in question. Since the Notification was applicable, unconditional stay granted.