The Allahabad CESTAT has held that no service tax Applicable when Sales Tax/VAT is paid on goods used for providing repair service.
The CESTAT observed that when the value of goods used in motor vehicle servicing is shown separately in the invoice and on the same Sales Tax/VAT has been paid, the supply of the goods will be treated as sale of goods.
An Investigation was conducted against the Appellant/assessee.
On the basis of scrutiny of the documents submitted by the Appellant, the Revenue Department issued a Show Cause Notice demanding service tax on the value of material/spare parts sold by the Appellant during servicing of motor vehicles.
The Appellant filed reply of the SCN and contended that the demand of service tax on sale material/spare parts. However, the Adjudicating Authority vide order confirmed the demand of service tax along with interest and imposed the penalty under Section 78 the Finance Act.
The Appellant contended that invoice clearly demonstrates that VAT has been charged on 100% value of spare parts, lubricants, oil etc. sold during the servicing of motor vehicles on which Sales Tax/VAT has been paid, cannot be included in assessable value and no Service Tax can be charged on the same.
The issue raised in this case was Whether service tax can be imposed on material/spare parts sold by the assessee during servicing of motor vehicles.
The tribunal Relied upon the judgement of Samtech Industries v. Commissioner of Central Excise – 2015 (38) S.T.R. 240 (Tri.-Del.), wherein the assessee was providing the service of repairing transformer and was using consumables like transformer oil and also component parts being coil etc., the Tribunal held, when the value of goods used is shown separately in the invoice and on the same Sales Tax/VAT has been paid, the supply of the goods would have to be treated as sale and the transaction which are sale cannot be a part of the service transaction.
Case Title: M/s Fast Track Auto Care (India) Pvt. Ltd. v. Commissioner of Central Goods & Services Tax, Noida