ADOR FONTECH LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) IN this application, the assessee (appellant) seeks waiver of pre -deposit and stay of recovery in respect of service tax of Rs. 81,02,717/ - for the period from July, 2003 to March, 2008 as also in respect of penalties imposed on them under various provisions of the Finance Act, 1994. The assessee was undertaking job -work of rebuilding of old worn -out rollers, liners, tyres and old worn -out components of cement plants, steel plants etc. during the material period. It appears that, upto 31 -3 -2005, they were paying the State VAT on approximately 70% of the total value of the contract and service tax on the rest of the value. From 1 -4 -2005, the assessee paid VAT on 80% of the contract value and service tax on 20% of the contract value. During the entire period, they remained registered with the department as providers of 'maintenance and repair services'. They did not opt to get registered as providers of 'works -contract' service even though this service was introduced in the meanwhile (1 -6 -07) for the purposes of levy of service tax. In this scenario, for the present, we are not inclined to accept the argument advanced by the Id. consultant with reference to works -contract. It appears from the memo of appeal that the appellant has ever acquiesced in the Revenue's stand that they had been undertaking repairs and maintenance services. The show -cause notice, which was issued on 7 -10 -08, invoked the extended period of limitation. It demanded differential service tax from the assessee on the ground that they had not included the value of the goods and materials used in the aforesaid activities, in the taxable value of the taxable service for the period of dispute. The show -cause notice also alleged that the value of the goods and materials so used were not separately shown in the relevant invoices and, therefore, the assessee was not entitled to claim the benefit of Notification No. 12/03 -S.T. The Id. consultant submits that, though the value of the goods and materials sold by them in the course of the job -work to the service recipient was not separately indicated in the relevant invoices, it was shown in a separate work -sheet attached to the invoices. At this juncture, we wanted to see a work -sheet, but the Id. consultant has not been able to produce the same. Nevertheless, he has pointed out that the internal auditor of the department accepted their practice of payment of service tax on 20% of the total value of the contract for the period upto November 2006 and that, accordingly, whatever service tax found by the auditor to have been short -paid by the assessee was paid by the latter. In this connection, our attention has been invited to letter dated 16 -12 -06 of the Superintendent (Audit) and the statement annexed thereto, which indicates that, for the period from July 2003 to November, 2006, an amount of Rs. 1,23,757/ - was found to have been short -paid by the party. This amount was paid by the appellant. The Id. Consultant has also fairly pointed out that a subsequent audit done by the Superintendent was not in favour of the assessee. The view taken in the second audit was to the effect that the party was liable to pay service tax on the entire value of the contract if they failed to satisfy the conditions attached to Notification No. 12/03 -S.T. ibid,as against the stand taken in the first audit in favour of grant of benefit of the Notification to the party.

(2.) THE Id. consultant has also relied on a few decisions of this Tribunal wherein the benefit of Notification No. 12/03 -S.T., ibidwas granted to the service providers. The latest of these decisions is Hindustan Aeronautics Ltd.v. Commissioner of Service Tax, Bangalore : [2010 (17) S.T.R. 249 He has also claimed support from Wipro GE Medical Systems Pvt. Ltd.v. Commr. of S.T., Bangalore : [2009 (14) S.T.R. 43 , wherein the assessee who had paid sales tax on materials representing 70% of the total value of contract was exempted from payment of service tax on the strength of Notification No. 12/03 -S.T. ibid.

(3.) AFTER considering the entire gamut of the submissions, we are of the view that, for this purpose, the appellant has not made out prima faciecase on merits against the demand of differential service tax, inasmuch as they have not been able to adduce evidence of their consistent plea that value of goods and materials sold by them to the service recipient in the course of the job -work of repairs and maintenance of machinery during the period of dispute was separately indicated in work -sheet. It is not in dispute that this value was not separately indicated in the relevant invoices. We have also seen a sample invoice depicted in the impugned order and the same does not indicate the value of the goods/materials which were used in the course of repairs and maintenance covered by the invoice. We specifically asked for work -sheets showing the value of goods/materials, which were claimed to have been attached to the invoices, but the Id. consultant has not been able to furnish any. Notification No. 12/03 -S.T. ibid,granted exemption from inclusion of value of goods/materials sold by the service provider to the service recipient in the course of rendering of taxable service, in the taxable value of the service for purposes of levy of service tax. The prime condition for this benefit was that the value of such goods/materials should be separately disclosed in the relevant invoice. This condition was apparently not fulfilled by the appellant and therefore, the benefit of the Notification would prima faciebe inadmissible to them. In other words, the appellant has failed to make out a prima faciecase on merits.