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West Coast Paper Mills V/S Commissioner of C. Ex. & S.T., Mangalore

    Final Order Nos. 21608-21609/2017 in Appeal Nos. ST/445/2007-DB and ST/1044/2009-DB

    Decided On, 11 August 2017

    At, Customs Excise Service Tax Appellate Tribunal South Zonal Bench At Bangalore

    By, THE HONORABLE JUSTICE: S.S. GARG
    By, MEMBER AND THE HONORABLE JUSTICE: B. RAVICHANDRAN
    By, MEMBER

    For Petitioner: Rukmani Menon, Advocate And For Respondents: J. Harish, Dy. Commissioner (AR)



Judgment Text


1. These two appeals are on same issue though against two different impugned orders passed by Commissioner (Appeals), Mangalore. The dispute involved in the present case is with reference to valuation of service rendered by the appellant under the category of cable operator service, the appellants received television signals from the Multi-System Operator (MSO) and distributed the same to its employees. They have collected consideration from the employees for such distribution of TV signals. The dispute in the present case is relating to valuation of such consideration. The Revenue entertained a view that the appellants incurred much higher expenditure in receiving the signal from MSO whereas they have collected much lesser amount for the same service rendered by them to their employees. In other words, the cost incurred by the appellants in getting the TV signals for distribution to the employees is considered as part of taxable value and demand has been confirmed against the appellant. Provisions of Rule 5 of Valuation Rules are relied upon. The learned counsel appearing for the appellant submitted that whatever amount they paid to the MSO for receipt of TV signals have suffered tax at the hands of MSO. Whatever amount they received from employees for distribution of TV signals as a cable operator has also suffered service tax. Since they did not get any more consideration in any form from their employees, there is no question of additional value on which Service Tax has to be paid.

2. The learned AR reiterated the findings of the lower authorities and submitted that the cost of service which the appellants received from MSO is directly relatable to the distribution of signals to their employees as such.

3. We have heard both sides and perused records.

4. Revenue relied on the provisions of Rule 5 to hold that the cost incurred by the service provider should form part of the value. We find that the appellants collected consideration for providing service to their employees. We note that there is no evidence for the proceedings before the lower authorities that other than this consideration, any amount in any form has been received by the appellant for providing such service. The inference based finding that the appellants benefited through such welfare measures by increased productivity cannot be considered for purpose of Section 67(sic). The quantification of non-monetary consideration should be based on specific and tangible evidence. In the present case, there is no non-monetary consideration or any extra payment by the employees which can be added to the taxable value. The appellants received s

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ignals and distributed the same. There is no allegation that such consideration has been specifically under-stated. In the absence of such evidence, we find that there is no scope for varying the taxable value. In view of the above discussion, we set aside the impugned orders and allow the appeals.
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