Since S. 67 of FA, 1994 provided for exclusion of cost of spare parts sold while rendering repair services of automobiles, cost of 'handling' such spare parts would also not form part of taxable value - Revenue appeal dismissed
THE respondent is a Service Tax assessee registered as an ‘Authorised Service Station'. While rendering the said services, they also sell spare parts of automobiles and in respect of which they collect 'handling' charges.
Revenue took a view that the handling charges for the spare parts should form part of the taxable value of the service rendered. Accordingly a ST demand of Rs.2,52,543/- for the period July 2001 to February 2004 was confirmed by the adjudicating authority.
The lower appellate authority noted that in the case of authorized service stations the cost of the spare parts are not to be included in the value of the services rendered as per section 67 of the Finance Act, 1994, as it stood at the relevant time. And since the cost of spare parts itself is not includible, therefore, handling charges incurred in respect of such spare parts also will not form part of the taxable value of the service rendered.
Aggrieved Revenue is before the CESTAT.
The Bench while dismissing the Revenue appeal as being devoid of merits observed -
"5.1 Section 67 as stood in the relevant time provided for exclusion of cost of spare parts sold while rendering repair services of automobiles. If that be so, the cost of handling of such spare parts incurred by the respondent would also not form part of the taxable value of the service rendered. Therefore, we do not find any infirmity in the reasoning adopted by the lower appellate authority…."