Smt. Archana Wadhwa, Judicial Member - The appellants are registered as service providers under the category of Management, Maintenance or Repair Service and Erection, Commissioning and Installation Service . They provide these services to M/s. Andhra Pradesh Southern Power Distribution Company owned by the Government of Andhra Pradesh for providing power distribution to Kadapa, Tirupathi, Guntur and Ongole districts. The appellant was discharging service tax on the service portion of the contract and was reflecting the same in their ST-3 returns, regularly filed with the Revenue.

2. Demands were raised against the appellant for the period from 2007-08 to 2012-13 (till 30.11.2012) by way of issuance of show-cause notice dated 20.4.2013 alleging that they were required to pay service tax on the entire contracted value, inclusive of the value of the materials.

3. During adjudication, appellant took a stand that in any case up to 21.6.2010, they were entitled to exemption under Notification No.45/2010 ST dated 20.7.2010 issued in terms of Section 11C vide which all taxable services rendered relating to the distribution of electricity were exempted from the levy of service tax up to the period 21.6.2010. The Commissioner in his impugned order has accepted the above stand of the appellant but went on to confirm the demand by observing that they have collected this service tax from their customers. However, we find that the rates collected in the contract were inclusive of all taxes and there is nothing in the said contract to suggest that service tax was separately charged by the appellant from their customers. The expression inclusive of taxes only means that there would be no further rise in the value of the contracts in case any demands stands raised against the service provider by any department of the Revenue. In the absence of any indication that service tax stands collected by the appellant from their customers, the above observation of the adjudicating authority cannot be appreciated.

4. It is further seen that the appellants also claimed that in any case the value of the materials, is not required to be added in the value of the services, in terms of provision of Notification No.12/2003-ST dated 1.3.2003. The contract itself shows the value of the materials separately and the value of the service separately. The appellants have also furnished copies of the VAT documents showing that VAT stands paid by them in respect of such materials. The adjudicating authority has denied the benefit of the same on the sole ground that the appellants have not claimed the Notification in the ST-3 returns filed by them.

5. We do not agree with the stand of the Revenue. At the time of filing the ST-3 Returns, the appellant was admittedly paying duty only on the value of the services, which fact itself is indicative that value of materials was not being taken into consideration. Otherwise also, mere non-mention of the Notification in the ST-3 Returns, does not give a reason to the adjudicating authority to deny the benefit of the same, without otherwise examining the applicability of the Notification in question. Admittedly, the Notification is applicable and as such, we are of the view that appellant has a good prima facie case so as to allow this stay application unconditionally. We order accordingly.