SAFETY RETREADING CO. PVT.LTD. vs COMM.OF CUSTOMS & CENT.EXCISE,SALEM

The Supreme Court ruled that under Section 65(105)(zzg) and Section 67 of the Finance Act, 1994, service tax is not applicable on the total amount charged for retreading of tyres if it includes the value of materials sold during the service. The Court emphasized that the valuation of taxable services excludes the cost of parts or materials sold, as clarified by Notification No.12/2003-ST. Consequently, the appeals were allowed, and the levy of service tax on the entire amount was set aside.