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TMI Blog2013 (9) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... are engaged in retreading of tyres and had entered into a franchisee agreement with M/s MRF. The process of retreading of tyres consisted of (i) carrying out inspection of worn out tyres supplied by their customers to check the suitability of re-treading; (ii) buffing of the tyres; iii) patching on the cuts if any; applying of solution/adhesives on the surface; iv) fixing the piece of the tread rubber and v) heating the tyre to ensure the bonding given to fix the tread rubber to the tyre. During the period 1-7-03 to 31-3-08, the appellant did not obtain any service tax registration and failed to pay service tax on the retreading activity undertaken by them. Accordingly a show cause notice dated 23-10-2008 was issued by the appellant demandi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) The dropping of demand for the period prior to 16-6-05 is correct as there was no periodic contract for the repair services undertaken. b) The dropping of proceedings for the period on or after 16-6-05 by extending the benefit of Notification No.12/2003-ST is not correct. The sale of material was not separate or independent to attract the benefit of said exemption. The respondent paid service tax only on 30% of the invoice value on the ground that normally tyre remoulding/retreading activities constituted approx. 70% material cost and balance 30% towards labour/processing charges. As per notification 12/2003, only value of goods and materials sold by the service provider to the recipient of the service is excludible subjec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m also made the following submissions. This tribunal in two cases, namely, Speedways Tyre Service vs. CCE, Ludhiana [2009 (14) STR 339 (tri-Del)] and Safety Retreading Co. Pvt. Ltd. vs. CCE, Salem [2012 (26) STR 225 (Tri-Chennai)], in identical situation pertaining to re-treading of tyres had held in the case of re-treading of tyres, the customers were only concerned about getting the worn out tyres retreaded and they were not buying any materials and therefore, the benefit of notification No. 12/2003 would not be available. In these decision, it was further held that mere fact of voluntary payment of sales tax/VAT on apportioned value attributable to value of goods sold cannot be considered as evidencing sale of goods for the purpose of no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the sample invoice issued by the Respondent for the re-treading work undertaken by them. The said invoice gives the following details. RM (Raw Material) Sub. To VAT xxxxxxx M.VAT @ 12.5% xxxxxxx L.C. (Labour Charges) Sub.to Service Tax xxxxxxx Service Tax @ 10.2% xxxxxxx The said invoice does not give any details of the description/quantity of the raw materials sold, unit rate for the goods sold and other relevant particulars. It merely attributes arbitrary values towards the sale of goods and labour charges without giving any basis of such sketchy details given in the document, it is difficult to come to any conclusion regarding the value of the goods sold. 6.2 Notification No.12/2003-ST dated 1-7-2003 grants exemption from s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered for the purpose of notification No.12/03-ST. In other words, the deeming fiction can be with respect to the concept of sale, but the same cannot be in respect of value of the goods sold. In the present case, the value adopted is on a deemed basis, that is, 70% of the gross amount charged. If the ratio of the larger bench decision is applied to the facts of the present case, the abatement towards value under notification NO. 12/03-ST cannot be extended and the appellant is liable to discharge service tax on the gross amount charged for the transaction. Merely because there is overlapping in the measure of tax for the purposes of levy of sales tax/VAT and service tax, there is no jurisdictional bar in the levy of service tax as he ..... X X X X Extracts X X X X X X X X Extracts X X X X
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