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TMI Blog2018 (3) TMI 1006X X X X Extracts X X X X X X X X Extracts X X X X ..... charged service tax on the standard percentage of labour deduction allowed under State Sales Tax/ VAT provisions and depositing the same. Apart from the above activity, M/s. Xerox were also engaged in the activity of agreements namely, Document Management Services/ Solutions Agreements (DMSA) entered with various clients. As per the said agreements, M/s. Xerox were required to provide service to their clients along with paper, envelopes and ink. The said service was classifiable under Business Support Service and on the said service, the appellant was paying service tax under the contract value, after deducting certain percentage towards material consumption and worked out based on actual value of material supplied and consumed under these contracts. An audit was conducted in 2007 and the show cause notices were issued to M/s. Xerox alleging that the deductions claimed by M/s. Xerox from the gross value received under the aforementioned service contracts is not permissible and they are liable to pay service tax on the gross amount received from the customers. The show cause notices were adjudicated, the adjudicating authority dropped the demand for Maintenance and Repair services a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision in the case of Hindustan Aeronautics Limited vs. CST 2010 (17) STR 81 (Tri. Bang.). He further relied on the decision of Safety Retreading Company Pvt. Limited vs. CCE 3027 (48) ELT 97 (SC). He submits that the adjudicating authority has held that M/s. Xerox has paid VAT using presumptive value of goods and the same presumptive value cannot be used for the purpose of payment of service tax as it is only applicable in cases of VAT. It is his submission that the adjudicating authority has held that presumptive value under VAT provisions cannot be extended to service tax provisions as both work on different spheres and State does not have competence to legislate in service tax matters. He submitted that in the case of Wipro GE Medical Systems Limited (supra) the Tribunal held that when the assessee paid VAT on an approximate value of 70% of the contract then service tax cannot be charged beyond 30% of the contract value. Therefore, he submits that the impugned order, to that account, is to be set-aside. He further submitted that the adjudicating authority did not allow M/s. Xerox to take abatement of the actual value of material of Business Auxiliary Service / 'Busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices. He relied upon the decision in the case of Xerox Modicorp Limited (supra) and CCE vs. Daelim Industrial Company 2004 (170) ELT A181(SC). He also relied on the decision of CCE vs. Balaji Tirupati Enterprise 2013 (32) STR 530 (All.) to say that the goods which are deemed to be sold in the execution of works contract shall not enter the purview of the levy of service tax. He also relied on the decision in the case of Technocrate Transformers vs. CCE, Kanpur 2015 (39) STR 996 (Tri. Del.) and Larsen & Toubro Limited 2015 (39) STR 913 (S.C.). He further submitted that the activities of the appellant are not covered under the scope of Works Contract Service defined under Section 65 (105) (zzzza) of the Act till the period 01.07.2012 since as per the definition, works contract shall be for one of the specified purpose. He further submitted that the demands for the period Sept. 2006 covered in the show cause notice dated 27.02.2008 is time barred as the M/s. Xerox was duly filing ST-3 returns and department was in knowledge of its activities. He also submits that M/s. Xerox was under bonafide belief as it had discharged sales tax/ VAT liability on the value of materials and goods inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iary Service was exempted under Notification No. 14/2004-ST dated 10.09.2004 therefore, the activities of the appellant is not taxable even if classified under Business Auxiliary Service . He also submits that the show cause notice dated 22.10.2008 is barred by limitation as it covered the period from July 2003 to December 2006. 7. On the other hand, ld. AR opposed the contention of the ld. Counsel and supported the impugned order qua confirming demands. He argued the matter at length that M/s. Xerox is engaged in the activity of providing printing solutions to the customers and it included pre-printing of the bills. Pre-printing involved printing of standard images such as customer s logo, advertisements and other information. The printing of final variable data was done on pre-printed paper. The supply of plain paper or pre-printed paper for printing the final bills was part of XGS. The final printing of bills with variable data supplied by the customer on the pre-printed paper or on the plain paper was also being done under XGS. The other activities involved were copying, scanning and faxing. Some post printing activities were also undertaken M/s. Xerox, such activities, inter- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he light of the decision in the case of Wipro GE Medical Systems Limited (supra) M/s. Xerox is liable to pay service tax only on Labour Portion. In the said case, it Tribunal observed as under:- "8. On a very careful consideration of the fact, we find that there is no dispute with regard to the leviability of service tax on the maintenance and repair services. The main point of dispute is with regard to the valuation. However, Section 67 of the Finance Act clearly provides for the abatement of the value of the goods sold in the course of the carrying out of the service. The point is whether the goods are actually sold. According to the department, the contract is only for the maintenance and repair. Therefore, it cannot be said that the spare parts were sold. This view is not correct. The chartered accountant has actually given a certificate with regard to the consumption of materials. It is also not denied that in the course of the maintenance no material was used. In several decisions it has been held that service tax cannot be levied on that portion of the value on which sales tax has been charged. This position has been elaborately dealt with in the decision of the Shilpa Col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the demand of interest, penalty etc. also are not justified. Hence, we allow the appeals with consequential relief." The said order was affirmed by the Hon'ble Apex Court reported as 2012 (28) STR J44 (SC). 10. (b) Whether the service namely, XGS shall qualify under 'Business Support Service' or Business Auxiliary Service or under Works Contract service We find that the Revenue sought to classify the said services under the category of Business Auxiliary Service . For better appreciation of the Business Auxiliary Service , we need to see the definition:- "With effect from 01.07.2003 - the "Business Auxiliary Service" means any service in relation to, - (i) promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) promotion or marketing of service provided by the client; or (iii) any customer care service provided on behalf of the client; or (iv) any incidental or auxiliary support service such as billing, collection and recovery of cheques, accounts and remittance, evaluation of prospective customer and public relations services. Section 65 (19) was amended with effect from 10th September 2004. The new version ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 74,28,063/- under the proviso to Section 73(1) of the Finance Act, 1994, along with interest under Section 75 and proposing penalties under Sections 76, 77 and 78 of the Finance Act, 1994. Eventually by the order dated 9-6-2008 the Commissioner confirmed the demand along with interest and imposed penalty. Aggrieved, the respondent-assessee preferred an appeal before the CESTAT." After examining the issue, the Hon'ble High Court observed as under:- "5. By the order impugned, the Tribunal held inter alia that the billing and accounting work executed by the assessee is taxable under Support Service of Business or Commerce and not as BAS. In Para 17 of its order, the Tribunal held that the agreement between the assessee and Northern Orissa for spot billing activity also has a similar provision as the agreement with the Electricity Distribution Companies in Andhra Pradesh; that in all these cases billing and accounting is not done on behalf of electricity companies/departments but is for them; there is no interaction/communication with the customers; meter readings are required to be provided by the electricity department and these are to be entered into computer and data ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness Auxiliary Service . Therefore, the Revenue s appeal deserves no merits hence, the same is dismissed. 12. Point (c) - Whether the activities undertaken by M/s. Xerox under various contracts of Maintenance and Repair Service and Business Support Service are properly classifiable under Works Contract or not The said issue has been examined by the Hon'ble Apex Court in the case of Larsen & Toubro Limited (supra) wherein it has been held that prior to 01 June 2007, if the services have been provided along with material and the value of material supplied cannot be vivisected, in that circumstance, the appropriate classification of the service shall be Works Contract service and the same was not taxable prior to 01.06.2007. Therefore, for the period prior to 01.06.2007, no demand is sustainable under the category of Maintenance and Repair Service/ Business Support Service/ Business Auxiliary Service for the activity undertaken by M/s. Xerox as the services of Business Support Service and Maintenance and Repair along with material and the agreement cannot vivisect the amount of material supplied by M/s. Xerox. 13. As we have hold that the activity undertaken by M/s. Xerox under var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided or to be provided by him; (ii) in a case where the provision of service is for a consideration not wholly or partly consisting of money, be such amount in money, with the addition of service tax charged, is equivalent to the consideration; (iii) in a case where the provision of service is for a consideration which is not ascertainable, be the amount as may be determined in the prescribed manner. The Hon'ble Apex Court further examined which service is liable to be taxed under Section 65 (105) (zzzza) of the Act and observed as under:- "24. A close look at the Finance Act, 1994 would show that the five taxable services referred to in the charging Section 65(105) would refer only to service contracts simpliciter and not to composite works contracts. This is clear from the very language of Section 65(105) which defines taxable service as any service provided . All the services referred to in the said sub-clauses are service contracts simpliciter without any other element in them, such as for example, a service contract which is a commissioning and installation, or erection, commissioning and installation contract. Further, under Section 67, as has been pointed out ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax." We have gone through the observations made by the Hon'ble Apex Court and the definition of Works Contract Service. The activities undertaken by M/s. Xerox under various contracts in question for Maintenance and Repair and XGS i.e. 'Business Support Service'/ Business Auxiliary Service do not qualify as taxable service under Works Contract service, under Section 65 (105) (zzzza) of Finance Act, 1994, during the period. As the activities undertaken by M/s. Xerox under various contracts in question, is in nature of Works Contract i.e. the service has been provide along with material and value of the material cannot be vivisected and therefore, prior to 01.06.2007 M/s. Xerox is not liable to pay service at all. For the period post 01.06.2007, as M/s. Xerox is providing services in question along with material but the same is not covered under Works Contract as per Section 65 (105) (zzzza) of the Finance Act, 1994. Therefore, M/s. Xerox is not liable to pay service tax under the category of Maintenance and Repair service/ 'Business Support Service'/ Business Auxiliary Service" 14. In view of the above analysis, we do not find any merit in the impugned order de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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