In a major relief to M/s. Schindler India Pvt. Ltd, the Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed service tax demand on supply of equipment.
Respondent-Department disputed payment of Service Tax on installation and commissioning after deducting the amount paid towards supply of equipments/parts on which VAT was discharged and issue show cause for recovery of Service Tax on the gross amount charged towards the entire process of supply of equipment as well as installation and commissioning on the ground that bifurcation of both the components were not apparently noticeable.
The Counsel for the Appellant Rohan Shah submitted that since these three conformation of demand had its genesis to the earlier demand and adjudication order and those were periodic demands issued under Section 73 (1A) of the Finance Act, 1994 that mandates that the ground raised in the subsequent periodic notices must be the ‘same’ as that of the previous notice and as the demands raised therein and confirmed by the adjudicating authority were set aside, these 3 adjudication orders are required to be set aside so as to maintain consistency and predictability in the order passed by the Tribunal.
The Authorised Representative for the Respondent-Department argued in support of the reasoning and rationality of the order passed by the Commissioner and has drawn our attention to the fact that there is clear finding of the Commissioner that noticee had adopted different valuation methods at different stages as per its suitability and no proof that VAT has been paid on the differential amount or cancellation of payment of VAT with VAT returns was submitted by it for which it is not possible to segregate value of materials from the value of taxable services and, therefore, conformation of the demand on the entire turnover needs no interference by the Tribunal.
A Two-Member Bench comprising Dr. Suvendu Kumar Pati, Member (Judicial) and Anil G. Shakkarwar, Member (Technical) observed that “we are of the considered view that the sole basis of conformation of demand made in these three appeals was that in the de novo proceeding the demand in its entity was conformed with interest and penalties but having regard to the fact that the said de novo adjudication order has been set aside by this Tribunal and the subsequent demands raised through Section 73(1A) as well as its conformation having based on the previous conformation orders, the same is liable to be set aside and we do so.”
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