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2017 (9) TMI 89 - AT - Service TaxBusiness of Photography - The appellants were paying service tax of 25% of the gross value of services and discharging VAT on the balance amount - The department was of the view that the appellants are liable to discharge service tax on the entire value of the services - whether constitutes fully service element or some part of sale element is also involved? - Circular No.12/2003-ST, dated 20.06.2003 - Held that: - The ratio of Safety Retreading Co, Pvt Ltd [2017 (1) TMI 1110 - SUPREME COURT] will have to be applied to these appeals, where the appellants had been paying service tax only on the labour component after taking 70% towards materials cost on the gross tyre retreading charges billed and received. The Hon'ble Supreme Court, while taking note of the Notification No.12/2003-ST, dated 20.06.2003 as also CBEC Circular, dated 07.04.2004 held that the assessee is liable to pay tax only on the service component quantified at 30%. In the present case, it emerges that all the appellants herein were discharging service tax liability on 25% of the gross billing based on the ad-hoc arrangement arrived at by their Association pursuant to Board's letter dated 07.04.2004 to The Punjab Colour Lab Association. We also find that there is no allegation by the department that 25/75 ratio of Service Cost to Material Cost being followed by the appellants is incorrect. Appeals will required to be remanded back to the original authority for the limited purpose of working out the net service tax liability after taking the value on which they have discharged sales tax/VAT - appeal allowed by way of remand.
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