Service Tax cannot be imposed on value of material supplied to client, so was held by Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad.
A search was carried out by the officers of Central Excise & Service tax at the premises of M/s Ssb Facility Management Services Pvt. Ltd.Balwantbhai Patel, office in-charge, informed the officers that M/s Ssb Facility Management Services was a proprietorship firm and had obtained Service tax registration for providing taxable services. M/s Ssb Facility Management Services firm was being operated upto the year 2010-11 and in 2010-11 a new firm was started working from the same premises in the name of M/s Ssb Facility Management Services Pvt. Ltd. He informed the officers that they were not including the value of the materials supplied to the service receivers and accordingly not paying any Service tax on the cost of the materials supplied. They were not charging any VAT in the bills raised to the Service receivers.
Summons were issued to Appellants to produce the documents and to give statement. However, Appellants failed to respond to the summons. On the basis of seized records and details available in ACES systems and Balance sheet revenue calculated the services tax liability. Accordingly, a show causewas issued proposing the service tax demand alongwith interest and penalty. Revenue also issued show cause notice proposing service tax demand of Rs. 1,01,15,634/- alongwith interest and penalty was imposed. M/s Ssb Facility Management Services Pvt. Ltd. has also filed declaration under VCES declaring tax dues of Rs. 3,41,351/-.
The revenue found that declaration filed by the Appellant was substantially false. Accordingly, a show cause notice was issued proposing rejection of declaration and demand of service tax. In adjudication, Appellants neither filed reply to show cause notices nor attended the personal hearing. Thus, the aforesaid show cause notices were adjudicated by the impugned common order confirmingservice tax demand proposed in the show cause notices. Being aggrieved thereof, Appellants filed present appeal before theTribunal.
Ramesh Nair, Judicial Member and Raju Technical Member held that “Ongoing through the grounds of appeals we find that the appellant’s submission in the defence is that department has gravely erred in not allowing exemption and deduction claimed while arriving at final taxable value. The demand of Service tax on material value supplied to the client during the impugned period was not justifiable. Service tax cannot be leviable on value of material supplied to the client. Notification No. 12/2003- ST dated 20.06.2009 provides exemption. They made declaration under VCES after considering the exemption and deductions.”
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