2025-VIL-383-CESTAT-MUM-ST
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SERVICE TAX CESTAT Cases

Service Tax - Works Contract, Valuation, Payment of VAT - Appellant is engaged in the business of manufacturing, supply, erection, commissioning, and maintenance of lifts and elevators - Dept issued a statement under Section 73(1A) of the Finance Act, 1994, demanding service tax based on the grounds that the appellant had been discharging VAT on 80% of the contract value and service tax on the remaining 20% of the value, which was not in accordance with the law - Whether the appellant was correctly discharging service tax on the value of the works contract by paying VAT on 80% of the contract value and service tax on the remaining 20% of the value – HELD - The appellant was correctly discharging service tax on the value of the works contract by paying VAT on 80% of the contract value and service tax on the remaining 20% of the value. The Tribunal relied on the amended Rule 2A of the Service Tax (Determination of Value) Rules, 2006, which provides that the value adopted for the purpose of payment of value-added tax is to be treated as the value of the property in goods transferred in the execution of the works contract - Tribunal also noted that in its earlier order where it had set aside the demand for the period from July 1, 2012, to March 31, 2014, on the grounds that the show cause notices were not properly issued and that the demand was made even when there were changes in the provisions of the law. The reasons for setting aside the demand for the earlier period were equally applicable to the present case - the demand is set aside and the appeal is allowed
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