TMI Blog2019 (1) TMI 916X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner had produced on record documentary proof that sale/deemed sale component corresponding to 70% of the gross value, the Petitioner was in fact assessed to and levied sale tax/VAT to the local Sale Tax/VAT Authorities. The Petitioner also adduced documentary proof regarding payment of such local sales tax/VAT to the State Authorities. - there was absolutely no justification on the part of the Commissioner in denying the Petitioner the benefit of exemption under Notification No. 12/2003-ST. Since, we are satisfied that the impugned order dated 14 October 2016 is required to be set aside, there is no necessity of deciding on the constitutional validity of Section 35F of the said Act. - WRIT PETITION NO. 213 OF 2018 - - - Dated:- 10-1-2019 - M.S. SONAK PRITHVIRAJ K. CHAVAN, JJ. Mr. Rajesh Chander Kumar, with Mr. Prashil Arolkar, Advocate for the Petitioner. Ms. Asha Desai, Senior Standing Counsel for the Respondents. ORAL JUDGMENT: (Per M.S. SONAK, J.) Heard Mr. Rajesh Chander Kumar, the learned Counsel for the Petitioner and Ms. Asha Desai, the learned Senior Standing Counsel for the Respondents. 2. The challenge in this Petition is to the order da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly, we once again overrule the preliminary objection raised by Ms. Desai on behalf of the Respondent. 7. The Petitioner carries on the activities of re-treading of motor vehicle tyres. The Petitioner is registered for the purpose of payment of service tax under the category management, maintenance or repair services . It is the case of the Petitioner that the Petitioner also pays the sales tax/VAT on the portion of gross receipts representing the value of goods and materials sold by way of consumption in carrying out the activity of re-treading of motor vehicle tyres in terms of Goa Value Added Tax Act (GVAT). 8. For the period between October 2006 and October 2010, the Petitioner was served with show cause-cum-demand notices, requiring the Petitioner to show cause as to why the value of demanded sale in terms GVAT should not be added to the gross amount of value of taxable service and service tax levied thereon. In addition, the Petitioner was required to show cause as to why penalty and interest be not levied for failure to pay service tax on the basis suggested in the show cause notices. The Petitioner filed detailed responses, mainly urging that deemed sale va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en a view that the Petitioner was required to pay service tax, taking into consideration the gross amount received in respect of retreading of tyres. These Authorities reasoned that the tread rubber rolls/strips used by the Petitioner for the purpose of retreading of tyres were entirely consumed in the retreading process and, therefore, the Petitioner was not entitled to split the deemed sale component relating to tread rubber and the service portion relating to retreading of tyres and paying VAT on former portion and service tax only on the later porition. Such reasoning came to be expressly disapproved by the Honourable Apex Court in the case of Safety Retreading Co. (P) Ltd. (supra). 15. The reasoning of the Honourable Apex Court on the aforesaid aspect is to be found in paragraph 10, which reads thus : 11. The exigibility of the component of the gross turnover of the assessee to service tax in respect of which the assessee had paid taxes under the local Act whereunder it was registered as a works contractor, would no longer be in doubt in view of the clear provisions of Section 67 of the Finance Act, 1994, as amended, which deals with the valuation of taxable servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions prescribed in the exemption Notification dated 20 June 2003. For these reasons, Ms. Dessai now submits that the impugned order be maintained. 17. In order to appreciate Ms. Dessai's aforesaid contention, reference is necessary to the exemption Notification dated 20 June 2003, which reads thus : In exercise of the powers conferred by section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts so much of the value of all the taxable services, as is equal to the value of goods and materials sold by the service provider to the recipient of service, from the service tax leviable thereon under section (66) of the said Act, subject to condition that there is documentary proof specifically indicating the value of the said goods and materials. [Provided that the said exemption shall apply only in such cases where - (a) no credit of duty paid on such goods and materials sold, has been taken under the provisions of the Cenvat Credit Rules, 2004; or (b) where such credit has been taken by the service provider on such goods and materials, such service provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ading into the exemption notification some conditions which do not find place in the same. 21. In the present case, the Petitioner had produced documentary proof by way of Cost Accountant's Certificate, clearly indicating the details and value of the goods and materials which formed the subject matter of sale/deemed sale. Further, in this case, the Petitioner had produced on record documentary proof that sale/deemed sale component corresponding to 70% of the gross value, the Petitioner was in fact assessed to and levied sale tax/VAT to the local Sale Tax/VAT Authorities. The Petitioner also adduced documentary proof regarding payment of such local sales tax/VAT to the State Authorities. As regards this position, in fact, there is no dispute whatsoever. Rather, express cognizance of this aspect has been taken by the Commissioner in paragraph 37 of the impugned order dated 14 October 2016. In such circumstances, therefore, there was absolutely no justification on the part of the Commissioner in denying the Petitioner the benefit of exemption dated 20 June 2003. 22. Incidentally, it is necessary to note that the contention very similar to the one now raised by Ms. Dessai, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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