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2009 (9) TMI 342 - AT - Service TaxCommercial or industrial construction service- the assessee was engaged in providing commercial or industrial construction and construction of residential complex services. During the material period it claimed deduction under Notification No. 12/2003-ST, dated 20.6.2003, in respect of the value of goods and materials consumed for providing above services. To determine the value of goods and material involved in the construction contract, the assessee followed the formula prescribed under Karnataka Vat Act and accordingly, paid VAT on 70 per cent of contract value and service tax on 30 percent of the value. However, a show cause notice was issued to the assessee proposing for demand of differential service tax on the ground that assessee had consumed materials in the provision of service but had not sold then to the customer, such consumption did not amount to sale and therefore it is not entitled to the benefit of the Notification. The Commissioner confirmed the said demand on the ground that assessee had not produced documents to evidence sale of materials for which exemption was claimed. Held that- the decision of the commissioner to collect service tax on the value on which the assessee had already paid State Vat was contrary to the principal of fiscal federalism adopted in the constitution. Thus the demand is not sustainable. Accordingly, the impugned order was vacated and appeal filed by the assesese was allowed.
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