The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) observed that no service tax leviable on installations on CNG Kits in absence of separate invoices. M/s. J.K. Motors is engaged in providing service under the category of ‘Authorised Service Station’ for Motor Vehicle servicing and repairing. During the course of audit it was noticed that the they have not added the value of consumable used while providing service to vehicle owners and free service commission in the taxable value and thereby found to have short paid service tax by not including the cost of spare parts consumed in gross taxable value.

The Commissioner confirmed the demand of Service Tax amounting to Rs.3,99,413/- along with interest and penalty whilst dropping the demand to the tune of Rs.93,96,763/- as raised in the show cause notice. Rajesh R. Kurup, Superintendent (AR) appearing on behalf of the Department reiterates the grounds of appeal and requests that the matter be remanded to the adjudicating authority for reconsideration and that the Commissioner has erred in extending the benefit of cum-tax to the assessee and thereby erred in less- confirming the demand along with consequential interest and penalty. Rahul Gajera, Counsel appearing on behalf of the Respondent reiterated the finding of impugned order.

A Two-Member Bench comprising Ramesh Nair, Judicial Member and Raju, Technical Member observed that “We find that separate invoices were not found as regards the Assessee having carried out installations on CNG kits that despite the assessee having carried out such installations and paid VAT thereon, it cannot be ipso facto concluded that they have not rendered any taxable service and are not liable to service tax. Therefore we find that in the interest of justice the said issues need to be examined in depth. The issue needs to be remanded to the adjudicating authority for reconsidering the value for demand taking to consideration the dispute raised in the show cause notice and submissions made by both the sides.”