TMI Blog2008 (8) TMI 207X X X X Extracts X X X X X X X X Extracts X X X X ..... . No. Appeal No. Order-in- Original No. Amount involved Service Tax (Rs.) Penalty (Rs.) 1. ST/367/2007 68/2007, dated 25-6-2007 3,03,77,607 200 per day u/s 76 1,000 under section 77 4,00,00,000 under section 78 2. ST/ 113/2006 7/2006, dated 30-1-2006 3,03,77,607 200 per day under section 76 1,000 under section 77 4,00,00,000 under section 78 2. Mr. G. Shiva Dass, the learned Advocate, appeared on behalf of the appellants and Ms. Sudha Koka, the learned SDR, for the revenue. 3. We heard both sides. 4. The appellants undertake installation of various medical equipments. They enter into Annual Maintenance Contract with their customers for maintenance of such equipments. In the present case, we are concerned with an agreement called Maxicare and Comprehensive Annual Maintenance Contract . In this the appellants apart from supplying labou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Karnataka and in terms of the decision of the Hon'ble High Court of Karnataka the Commissioner had to hear the appeals de novo and he has passed the impugned Order-in-Original de novo. In the impugned order, the Commissioner has stated that the Constitutional article 366(29A)(B) cited by the appellant has absolutely no application. He says that the contract is only for maintenance and repair and there is no involvement of any sale of the material. This is the thrust of his argument. Therefore, he has concluded that the appellants are liable for the entire value received by them. There cannot be any abatement. He has also stated that this 30 per cent:70 per cent division of the contract value for purposes of service tax and sales tax is entirely arbitrary. He has also refused to accept the contention that in the contract of this type the goods which are replaced should be considered as goods sold. 6. The learned Advocate made the following submissions: (i) Section 67 of the Finance Act, 1994 itself recognizes the fact that goods and materials would indeed be sold during the course of the maintenance or repair. Further, it was submitted that the Hon'ble High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10,023,947 61% Grand Total 117,273,936 79,946,900 68% (iv) The above working was in line with the abatement granted by the State Government towards labour while calculating the Works Contract. This is the reason for the appellants to adopt the ratio of 70:30 for the payment of service tax. It is now settled law that once an amount suffers sales tax, service tax cannot be demanded on the same amount. The following case laws were relied on: (a) Bharat Sanchar Nigam Ltd. v. Union of India [2006] 3 STT 245 (SC). (b) Imagic Creative (P.) Ltd. v. Commissioner of Commercial Taxes [2008] 12 STT 392 (SC). (c) BPL Mobile Communications Ltd. v. CCE [2007] 8 STT 416 (Mum.-CESTAT). (d) ASL Motors (P.) Ltd. v. CCE, C ST [2008] 17 STT 83 (Kol.-CESTAT). (v) It was also stated out of the total turnover of Rs. 49,47,95,474, the appellants had received only Rs. 30,17,97,929. Taking this into consideration the value of taxable service tax works out to Rs. 2,58,66,915 only. It was submitted that the appellants had actually paid excess service t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce and repair services. The main point of dispute is with regard to the valuation. However, section 67 of the Finance Act clearly provides for the abatement of the value of the goods sold in the course of the carrying out of the service. The point is whether the goods are actually sold. According to the department, the contract is only for the maintenance-and repair. Therefore, it cannot be said that the spare parts were sold. This view is not correct. The chartered accountant has actually given a certificate with regard to the consumption of materials. It is also not denied that in the course of the maintenance no material was used. In several decisions it has been held that service tax cannot be levied on that portion of the value on which sales tax has been charged. This position has been elaborately dealt with in the decision of the Shilpa Colour Lab case decided by this Bench and cited (supra). This view has been affirmed in many decisions. Once, the sales tax has been paid on the materials, then on the same service tax also cannot be charged. In fact, the appellants had relied on the decision of the Hon'ble Karnataka High Court which has been upheld by the Hon'ble Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X
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