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2023 (6) TMI 1308 - AT - Service TaxLiability of Service Tax - differential amount of consideration and actual value of spare parts for the period prior to 01.07.2012 or not - value as per Rule 2A(i) (c) of the Service Tax Valuation Rules, 2006 or Rule 2A(ii) of the Rules? - extended period of limitation - penalty. Whether the appellant is liable to pay Service Tax on the differential amount of consideration and actual value of spare parts for the period prior to 01.07.2012 or not? - HELD THAT:- It is a fact on record that maintenance and repair contracts were entered between appellant and TISCO is the composite contracts involving supply of goods as well as providing the service. In that circumstances, when there is a contract of supply of goods as well as services, the same was termed as ‘works contract’ and the same was taxable w.e.f. 01.06.2007 under the category of works contract services as held by the Hon’ble Apex Court in the case of COMMISSIONER, CENTRAL EXCISE & CUSTOMS VERSUS M/S LARSEN & TOUBRO LTD. AND OTHERS [2015 (8) TMI 749 - SUPREME COURT]. Therefore, prior to 01.06.2007 the nature of activity undertaken by the appellant is correctly classifiable under works contract services and for the period prior to 01.06.2007 covered by the decision of Larsen & Toubro Ltd. (supra) and not liable to pay Service Tax at all. W.e.f. 01.06.2007, similar issue has come up before this Tribunal in the case of Xerox India Ltd. [2018 (3) TMI 1006 - CESTAT CHANDIGARH] wherein this Tribunal has held that if service has been provided along with material and the value of material supplied cannot be vivisected, in that circumstances, appropriate classification of the service shall be works contract service and same is not taxable prior to 01.06.2007. Further it was held by this Tribunal that for the period post 01.06.2007, the maintenance and repairs and XGS services are classifiable under works contract service. As it has been held that post 01.06.2006 also the activity of maintenance and repairs if provided along with material, in that circumstances the appropriate classification is under works contract service and demand under the category of maintenance and repair service is not sustainable. Therefore, prior to 01.07.2012, the appellant is not liable to pay Service Tax in question. Accordingly the demand for the period prior to 01.07.2012 confirmed by the impugned orders are set aside. Accordingly, this issue is answered in favour of the Appellant. Whether the appellant is liable to pay Service Tax on the value as per Rule 2A(i) (c) of the Service Tax Valuation Rules, 2006 or Rule 2A(ii) of the Rules? - HELD THAT:- Rule 2(1)(c) prescribed that where VAT/Sales Tax has been paid or payable on actual value of the property goods transferred in execution of works contract, then the such value adopted for the purpose of payment of Value Added Tax or Sales Tax shall be taken as the value of property goods transferred in execution of the said works contract for determination of the value of the service portion in execution of the contract under the clause which means if the actual value of goods transferred is available on which VAT has been paid, the same shall be excluded from the total value of works contract service and on remaining part of the value, the Service Tax is payable. Admittedly, in the case in hand, the service has been classified under works contract service and the value of goods supplied is ascertainable on which they have paid VAT, therefore, the same has to be excluded from the value of works contract to ascertain the value of taxable service provided by the appellant. Rule 2A(c) of the Valuation Rules only applies in case the value of goods supplied was not determined under the Rule 2A of the Rules. But, in the case in hand, value of material supplied has already been ascertained and VAT has been paid thereon, in that circumstances, for the period post 01.07.2002, the taxable value is to be determined in terms of Rule 2A(i)(c) of the Valuation Rules, 2006, therefore this issue is also answered in favour of the Appellant. Whether in the facts and circumstances of the case extended period of limitation is invocable or not? - HELD THAT:- As whole case is interpretation of the provisions of Service Tax (Determination of Value) Rules, 2006 and classification of the services therefore the extended period of limitation is not invocable in the facts of the present case. Accordingly, the said issue is also answered in favour of the appellant. Whether penalty can be imposed on the appellant or not? - HELD THAT:- In the facts and circumstances of the present case, no penalty is imposable on the appellant. Accordingly, same is answered in favour of the appellant. All the issues have been answered in favour of the appellant - Appeal allowed.
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