Valuation of taxable services
CESTAT, CHENNAI BENCH
CMS (
v.
Commissioner of Central Excise, Pandicherry
P.G. CHACKO, JUDICIAL MEMBER
AND P. KARTHIKEYAN, TECHNICAL MEMBER
STAY ORDER NO. 701 OF 2006
APPLICATION NO. S/PD/26/2006 IN APPEAL NO. S/116/2006
APPEAL NO. S/PD/26/2006 IN S/116/2006
JUNE 9, 2006
Section 67, read with section 86, of Finance Act, 1994 - Valuation of
taxable services for charging service tax - Period 2000-03 - Under an operation
and maintenance agreement assessee was running an electric generating plant of
‘S’ Ltd. - Revenue after examining provision of said O&M agreement come to
conclusion that assessee was rendering, management consultancy service,
consulting engineers service and clearing and forwarding agents service to ‘S’
Ltd. - Accordingly, service tax was demanded from assessee considering amount
received by assessee form ‘S’ Ltd as gross value for all these services --
Whether since for levy of service tax under each head, there should be a gross
value on which service tax would be levied and in instant case there being no
break up value of amount so as to find out what was gross demand for each of
three services for which demand was raised, assessee had prima facie case
against demand of tax - Held, yes - Whether, therefore, waiver of pre-deposit
requirement and stay of recovery of amount of tax and penalties were to be
granted to assessee - Held, yes (Para 4)
The assessee entered into an operation and maintenance agreement with S Ltd. Under that agreement the assessee was required to run an electric power generation plant of ‘S’ Ltd. (i.e., owner). After examining the provisions of the O&M agreement the details furnished by the assessee upon requisition, the department came to the conclusion that the assessee was rendering management consultancy service, consulting engineer’s service and clearing and forwarding agents service to ‘S’ Ltd. during the period 2000 to 2003. The amount received by the assessee from ‘S’ Ltd. was taken as the gross value for all those services and a demand was raised accordingly. In adjudication, the original authority confirmed the demand of service tax and also imposed penalties upon the assessee and the same was affirmed by the Commissioner (Appeals).
On application:
The revenue had not come out clearly with a good case for demanding
service tax from the assessee. Admittedly, the demand was under three different
heads. For levy of service tax under each head, there should be a gross value
on which service tax would be levied. In the instant case, there was no
break-up of the amount so as to enable one to find out as to what was the gross
value for each of the three services. In other words, the quantum of tax levied
on the individual services was uncertain. That uncertainly was discernible from
the findings recorded by the authorities also. In the circumstances, the
assessee had a prima facie case
against the demand of tax. In the circumstances, waiver of predeposit and stay
of recovery in respect of the amounts of tax and penalties were to be
granted. [