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2015 (2) TMI 569 - AT - Service TaxWaiver of pre deposit - Valuation of taxable services - inclusion of supply of diesel - Held that:- As per the contract the appellants are required to keep the mobile towers in perfectly operational and ready condition (uptime 99.95%). Ensuring readiness for functionality is different from actual functioning. Readiness for functionality (i.e. uptime) only requires that the systems including generating set are found to be ready to function whenever required. Thus diesel consumption is not required for providing such service but diesel consumption is required for generating electricity. We find that electricity is "goods" and "diesel" is clearly an input for producing electricity by generating sets. Also we find that as per the contract the appellants were required to procure diesel from designated outlets and of specified quality and they were to raise periodical and separate bills for the reimbursement of the cost of diesel which was filled. Thus in a sense it was arguably a case of diesel being supplied by the service recipient. As regards the contention of the ld. AR, with reference to the judgment of Supreme Court in the case of Idea Mobile Communications (2011 (8) TMI 3 - SUPREME COURT OF INDIA) it is seen that the judgement was predicated on the value of SIM cards being insignificant and sales tax department having given up their claim to charge sale tax thereon. Property in goods (diesel) was transferred to the service recipient before it was consumed for producing electricity and therefore, on that count also, its value was not liable to service tax. We find that in the case of Xerox Modicorp Ltd. vs. State of Karnataka - Manu/SC/0505/ 2005 Hon'ble Supreme Court held that in case of operation of Xerox machines transfer of property in the form of tones/developer take place as the property passes the moment the goods are put in the machine because at that stage they are not consumed but are tangible goods which can pass; they are consumed only after they are put in the machines. - value of diesel is not includible in the assessable value of the impugned service. Accordingly we waive the pre-deposit and stay recovery of the impugned liability during pendency of the appeal - Stay granted.
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