Tyresoles (India) Pvt. Ltd. Vs Union of India (Karnataka High Court)
Karnataka High Court held that in case of service of retreading tyres, service tax is payable only with respect to the service component under the Finance Act. Service tax is not payable on the entire gross value. Hence, petition partly allowed.
Facts- The petitioner carries on the business of retreading tyres, which is a process whereby tread rubber is affixed to worn out tyres by bonding in order to reinforce them for further use. It is the case of the petitioner that the said activity involves various stages wherein the materials are procured and consumed in the process of retreading which becomes part and parcel of the retreaded tyres. That the execution of the work by the petitioner is a composite indivisible works contract. Thus, the petitioner discharges Value Added Tax to the State of Karnataka on 70% of the turnover, being the value of the deemed sale component and discharges Service Tax to the Union of India on 30% of the turnover being the value of the service provided.
The respondent authorities/Revenue have issued the impugned orders-in-original seeking to levy service tax on the entire turnover of the value of the service provided by the petitioner, which the petitioner has called in question in the present writ petitions.
