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February 2015

[2014] 52 Taxmann.com 377 (Allahabad) CCE vs. Goverdhan Transformer Udyog (P) Ltd.

By Puloma Dalal, Jayesh Gogri, Mandar telang Chartered Accountants
Reading Time 1 mins
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“Maintenance and Repairs Contract” – Agreement & Invoice providing bifurcation of material portion and service portion – Service tax applicable only on service portion.

Facts:
The assessee provided management, maintenance and repairs service for the repair of old and damaged transformers. Whether transformer oil, HV/LV Oil and spare parts which are goods incorporated into the transformers belonging to the customer should be considered for the purpose of quantifying the gross consideration received as constituting the taxable value. The Tribunal decided in favor of the assesse.

Held:
Dismissing the revenues appeal, and relying upon CCE vs. J. P. Transformers [2014] 50 Taxmann.com 31 (All) dealing with the identical factual matrix, affirmed the decision of the Tribunal and held: when the agreement between the assessee and the customer incorporates separately the value of goods and materials from the value of services rendered, service tax cannot be levied on the component of goods or materials. The service tax can be levied only on the value of services rendered.

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