2013 (12) TMI 1571 - AT - Service Tax

Summary

Issues involved: Appeal against service tax liability, interest, and penalties due to undervaluation of services by not including value of free supply of cement and steel from service recipient.

Judgment Summary:

Issue 1: Undervaluation of services
The appeal was filed against the order imposing service tax liability, interest, and penalties on the grounds of undervaluation of services due to the exclusion of the value of free supply of cement and steel from the service recipient. The Appellants contended that the issue was covered by the judgment of the Larger Bench of the Tribunal in the case of Bhayana Builders (P) Ltd. The departmental representative also acknowledged that the issue was settled by the Larger Bench in the mentioned case. Upon reviewing the records, it was found that the inclusion of the value of free goods supplied by the service recipient to the Appellant for the discharge of service tax liability was addressed by the Larger Bench in para 16 of their judgment. The Larger Bench concluded that the value of goods supplied free of cost by the service recipient should be outside the taxable value or the gross amount charged, as it does not constitute consideration paid by or flowing from the service recipient to the benefit of the service provider. Therefore, the impugned order imposing service tax liability was set aside, and the appeal was allowed.

Conclusion:
The impugned order imposing service tax liability, interest, and penalties was set aside based on the judgment of the Larger Bench in the case of Bhayana Builders (P) Ltd., which clarified that the value of free supplies by the service recipient should not be included in the gross amount charged for service tax purposes.