TMI Blog2020 (4) TMI 867X X X X Extracts X X X X X X X X Extracts X X X X ..... d that there is no sale or deemed sale of parts or other materials used in the execution of contract of repairs and maintenance - demand withheld. The substantial questions of law are answered in favour of the assessee - Appeal allowed. - CEA No. 8/2014 - - - Dated:- 13-3-2020 - Shri Justice Ajay Kumar Mittal, Chief Justice And Hon ble Shri Justice Vijay Kumar Shukla, Judge For the Appellant : Shri Mukesh Agrawal, Advocate For the Respondent : Shri Gajendra S. Thakur, Advocate JUDGMENT (Oral) PER: AJAY KUMAR MITTAL, CHIEF JUSTICE: Challenge in the present appeal preferred under Section 35G of the Central Excise Act, 1944 (hereinafter referred to as the Act ) is to the order dated 08.01.2014 passed by the Custom, Excise and Service Tax Appellate Tribunal, New Delhi (for short the Tribunal ) in Service Tax Appeal No.521/2008-CU(DB). 2. This appeal was admitted vide order dated 09.12.2014 on the following substantial questions of law:- (1) Whether, while providing photography service whether the use of the paper upon which an image is printed using certain consumables and chemicals, being incidental to the provision of service, amount to sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nance Act, inter alia, on the ground that materials used by the assessee in reconditioning of tyres and conveyor belts are in the nature of chemical etc., therefore, are to be included in the value of the services. The Tribunal allowed the appeal of the Revenue vide impugned order dated 08.01.2014 (Annexure A-7) thereby holding that the issue involved therein has been put to rest by Larger Bench of the Tribunal in Aggarwal Colour Advance Photo System vs. Commissioner, Central Excise, Bhopal, 2011 (23) STR-608 (Trib.-LB). As a result, the demand raised vide show cause notice dated 01.02.2008 (Annexure A-2) for recovery of service tax to the tune of ₹ 97,86,024/- along with penalty under the provisions of the Act stands against the appellant-assessee. In this manner, the legality and validity of the impugned order has been called in question by the appellant. 4. Learned counsel for the parties were ad-idem that the substantial question of law No.(i) formulated at the time of admission on 09.12.2014 was inadvertently recorded therein as the present appeal was taken up with other connected appeals where the said question arose and was ordered to be taken up with CEA No.01/2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned order relied upon the order passed by the Larger Bench of the Tribunal in Aggarwal Colour Advance Photo System (supra) wherein issue was involved in respect of photography service as to whether for the purpose of Section 67 of the Finance Act, the value of service provided in relation to photography would be the gross amount charged including the cost of material, goods used/consumed minus the cost of unexposed film. The Larger Bench came to the conclusion that the consumables and chemicals used for providing such service disappear when the photograph emerges and thus, value of photography service includes all elements which bring that to the deliverable stage. Accordingly, it was held that gross value of service rendered is liable to service tax, as no amount is paid separately for photography service and the goods used and consumed in providing such taxable service. 10. The order passed by the Larger Bench of the Tribunal in Aggarwal Colour Advance Photo System (supra) was directly and substantially in issue before this Court in CEA No.01/2013 (M/s Agrawal Colour Advance Photo System vs. Commissioner of Central Excise and another) and connected matters. The said ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of the appellate Tribunal that it is the entire of the gross value of the service rendered that is liable to service tax, in our considered view, does not lay down the correct proposition of law which, according to us, is that an assessee is liable to pay tax only on the service component which under the State Act has been quantified at 30%. 12. An argument has been advanced by Ms. Pinky Anand, learned Additional Solicitor General that there is no evidence forthcoming from the side of the assessee that the value of the goods or the parts used in the contract and sold to the customer amounts to seventy per cent (70%) of the value of the service rendered which is the taxable component under the State Act. The aforesaid argument overlooks certain basic features of the case, namely, the undisputed assessment of the assessee under the local Act; the case projected by the Department itself in the show cause notice; and thirdly the affidavit filed before this Court by one S. Subramanian, Commissioner of Central Excise, Salem. 13. No dispute has been raised with regard to the assessment of the appellant on its turnover under the local/State Act, insofar as payment of value added ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the gross value received. There is again no contest to the same. Leaving aside the question that the case now projected, with regard to lack of proof of incurring of expenses on goods and materials which has been transferred to the recipient of the service provided, appears to be an afterthought, even on examination of the same on merits we have found it to be wholly unsustainable. 16. We, therefore, in the light of what has been discussed above, set aside the majority order of the appellate Tribunal dated 14th October, 2011 and hold that the view taken by the learned Vice President of the appellate Tribunal is correct and the same will now govern the parties. All reliefs that may be due to the appellant assessee will be afforded to it forthwith and without any delay. All amounts, as may have been, deposited pursuant to the order(s) of this Court shall be returned forthwith to the appellant, however, without any interest. Bank guarantee furnished insofar as the penalty amount is concerned shall stand discharged. 12. For the reasons stated hereinabove, the substantial questions of law, as reproduced in the earlier part of the order, are answered in favour of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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