TMI Blog2009 (3) TMI 135X X X X Extracts X X X X X X X X Extracts X X X X ..... 12/2003 - ST/284 OF 2008 - 282 OF 2009 - Dated:- 24-3-2009 - T.K. JAYARAMAN, TECHNICAL MEMBER and M.V. RAVINDRAN, JUDICIAL MEMBER M.S. Srinivasa for the Appellant. V.R. Gyaneshwar for the Respondent. ORDER T.K. Jayaraman, Technical Member. - This appeal has been filed against the Order-in-Revision No. 1/ST/08, dated 27-3-2008/3-4-2008 passed by the Commissioner of Central Excise, Customs Service Tax, Mysore. 2. We heard both sides. 3. The appellants are carrying out retreading of old tyres used in motor vehicles. Revenue proceeded against the appellants on the ground that they were not including the value of materials such as tread rubber, cushion gum, vulcanizing solution, which were used/consumed in the activi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s were made for imposition of penalties also. After giving an opportunity, the Commissioner held that the appellants are liable to discharge the service tax liability on the gross receipts. Consequently, he set aside the order dated 19-4-2007 passed by the Joint Commissioner of Central Excise, Mysore, and confirmed the proposed demand. Interest was also demanded. He imposed a penalty of Rs. 200 per day under section 76 of the Finance Act for the period prior to 18-4-2006 and at the rate of 200 per day or 2 per cent of the tax whichever is higher from 18-4-2006 till the date of actual payment. The appellants are highly aggrieved over the impugned order. 3.1 'Tyre Retreading' is a composite contract involving both sale of materials and re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be the value. (c) As per the provisions of rule 5 of the Service Tax (Determination of Value) Rules, 2006, where, any expenditure or cost are incurred by the service provider in the course of providing taxable service, all such expenditure or costs shall be treated as consideration for the taxable service provided or to be provided and shall be included in the value for the purpose of charging service tax on the said service. (d) Tyre retreading activity is considered as 'Works Contract' involving transfer of property in goods chargeable to Sales Tax under section 5B of the Karnataka Sales Tax Act, 1995 (up to 31-3-2005) and thereafter chargeable to VAT with effect from 1-4-2005. (e) If Tyre retreading activity were not to be Works Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cost of materials/goods used in rendering services is exempted. It is not chargeable to service tax when it is separately indicated in invoice and no credit of duty is claimed thereon, which are the conditions of Notification No. 12/2003-ST. (ii) Speedways Tyre Service v. CCE [2008] 14 STT 384 (New Delhi-CESTAT). (iii) PLA Tyre Works v. CCE (ST) [2008] 12 STT 30 (Chennai-CESTAT). 4. The learned Departmental Representative reiterated the impugned order. 5. We have gone through the records of the case carefully. From the records, it is clear that the activity of the appellant is treated as Works Contract under the Karnataka State Legislation. There is evidence that the appellants are paying VAT on the materials used wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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