INDIAN ARTS BUREAU, Vs. COMMISSIONER OF SERVICE TAX

JUDGEMENT

(1.) THE applications arising for our consideration are in two appeals S/269 & 271/2006 and the same are for waiver of predeposit and stay of recovery in respect of service tax demanded from the appellants and penalties imposed on them. The appeals are against Order -in -Appeal Nos. 31 - 34/2006 -ST dated 13.11.2006 passed by the Commissioner (Appeals), Coimbatore. We are told that two other appeals, S/268 & 270/2006, filed by the same party are also pending and that the same are also against the above order of the appellate Commissioner, but these two appeals do not figure in today's cause -list before us. These appeals along with stay applications therein have been called for for disposal together with the matters figuring in the cause -list.

(2.) AFTER examining the records and hearing both sides, we are of the view that all the four appeals require to be finally disposed of at this stage. Accordingly, after dispensing with predeposit, we take up the appeals.

(3.) WE have heard both sides on merits. The appellants claim the benefit of Notification No. 12/2003 -ST dated 20.6.2003 which had exempted the value of goods and materials sold by the service provider to the service recipient, from payment of service tax. This benefit was claimed before the lower appellate authority also but that authority, apparently, was not impressed with the claim. It is submitted by learned Counsel that CBEC had also clarified vide letter dated 7.4.2004 in F.No. 233/2/2003 -CX4, on a representation submitted to the Finance Minister by the Association of Photographers, of which the appellants are also a member, that the exemption under the above Notification was available to input material consumed/sold by the service provider while providing the taxable service. The circular stipulated that the service provider should maintain records showing particulars of the materials consumed/sold and should separately indicate the value of such material in the Bill/Invoice issued in respect of the service. Counsel submits that these conditions stipulated by the Board were scrupulously followed by the appellants and therefore the benefit of the above Notification should have been allowed to them. Learned SDR, on the other hand, submits that the above clarification was superseded in CBEC's Circular No. 233/2/2003 -CX dated 3.3.2006, wherein it was clarified that the goods consumed by the service provider would not get the benefit of Notification No. 12/2003 -ST ibid. It is submitted that this circular dated 3.3.2006, being clarificatory, had retrospective effect so as to cover the entire period of dispute and therefore the benefit of the above Notification was not admissible to the appellants. In his rejoinder, ld. counsel relies on the Tribunal's decision in Adlabs v. Commissioner 2006 -TIOL -415 -CESTAT -BANG, wherein, for a comparable period, the Board's earlier circular dated 7.4.2004 was given effect to. Counsel has also claimed support from the Supreme Court's judgment in Paper Products Ltd. v. Commissioner for his submission that the effect of the earlier circular was not nullified by the subsequent one.