fiogf49gjkf0d
Appellant retreaders of tyres — Paying service tax under maintenance and repair services on labour charges — Material cost benefit under Notification No. 12/2003-ST, dated 20-8-2003 claimed — As per Revenue, under the notification benefit available for actual sale of material and not raw material consumed during course of provision of service available — Held, There is no evidence of sale of material in rendering maintenance and repair service — ‘Deemed sale’ relevant only in case of services under works contract and not in respect of maintenance and repair service — Satisfaction of conditions under Notification 12/2003-ST not proven — Hence benefit denied.
Facts:
The appellant is engaged in retreading of used tyres and thus providing repairs and maintenance service and paying service tax on the component labour charges involved. The tread rubber patches, bonding gum, etc. are purchased and used for redoing treading on them. The invoices for this job are prepared by indicating separately the actual cost of material used. Due VAT as per the Tamil Nadu VAT Act, 2006 is paid on this. Also filed returns with sales tax authorities which are duly assessed. The Revenue held that only in the case of actual sale of material, benefit of Notification 12/2003 is available and not in case of consumption of raw material during the course of providing service.
The Bench referred to many relevant decisions on the subject matter which inter alia included Bharat Sanchar Nigam Ltd. v. UOI, (2008) 200 STR 161 (SC), Rainbow Colour Lab. v. State of MP, (2000) 2 SCC 385, Shilpa Colour Lab, (2007) 5 STR 423 (Tri.-Bang.), Speedway Tyre Service v. CCE, (2009) 18 STT 293 (Delhi), PLA Tyre Works v. CCE, (2009) 19 STT 362 (Chennai), Idea Mobile Communication Ltd., (2011) 23 STR 433 (SC) and Aggarwal Colour Advance Photo System (2011) 23 STR 608 (Tri.-LLB), etc.
The two Members of the Bench differed in their views. The points of difference placed before the Third Member.
The Third Member recognised that the issue related to interpretation of Notification 12/2003-ST as well as benefit of deduction of cost of raw materials available considering the tread rubber patches and bonding gum used as ‘deemed sale’ on which VAT is paid.
Held:
There is no evidence of sale of material in rendering service of maintenance and repair.
The concept of ‘deemed sale’ relevant only in respect of services under the category of ‘works contract’ for service tax purpose.
‘Maintenance and repairs’ being a specific service cannot be treated as service under ‘works contract’ for service tax purpose.
The assessee did not prove that conditions under Notification 12/2003-ST were satisfied and therefore they are not entitled to the benefit under the said Notification.
