2013 (12) TMI 1598 - AT - Service Tax

Short-payment of duty - value of diesel and explosives supplied free by the service recipient M/s. SCCL - Held that - the Honble High Court of Delhi in Intercontinental Consultants & Technocrats Pvt. Ltd. Vs. Union of India, 2012 (12) TMI 150 - DELHI HIGH COURT held that the value of diesel supplied free of cost by a service recipient to the appellant/service provider for providing the taxable site formation and clearance, excavation and earthmoving and demolition service would not be a component of the gross value charged for the service provided for computation of tax under Section 67 of the Act - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Confirmation of service tax liability and penalties.
2. Allegations of short-remittance of service tax.
3. Consideration of value of diesel and explosives in service tax assessment.
4. Interpretation of Section 67 of the Act.
5. Comparison with relevant legal precedents.
6. Decision on the sustainability of the adjudication order.

Confirmation of service tax liability and penalties:
The order confirmed a service tax liability of &8377; 74,14,396/- and &8377; 12,26,38,376/- for a specific period, along with interest and penalties, including a penalty of &8377; 15 crores under Section 78 of the Finance Act, 1994, due to alleged short-remittance of service tax.

Allegations of short-remittance of service tax:
The appellant, engaged in providing various services, was alleged to have under-remitted service tax due to the failure to disclose the value of diesel and explosives provided free of charge by the service recipient. This non-disclosure led to the initiation of proceedings against the appellant.

Consideration of value of diesel and explosives in service tax assessment:
The appellant received diesel and explosives free of charge from the service recipient for executing works, including service components. The Revenue contended that the value of these supplies should be part of the gross consideration received by the appellant for providing taxable services, leading to the under-remittance of service tax.

Interpretation of Section 67 of the Act:
The Tribunal analyzed the scope of Section 67 of the Act, considering relevant legal precedents. It was highlighted that the value of diesel and explosives supplied free of cost should not be considered a component of the gross value charged for the services provided, as per the decisions in similar cases.

Comparison with relevant legal precedents:
The Tribunal compared the case at hand with legal precedents such as M/s. Bhayana Builders (P) Ltd. Vs. C.S.T., Delhi and Karamjeet Singh & Co. Ltd. Vs. C.C.E., Raipur, where it was established that the value of diesel supplied free of cost should not be included in the taxable value for service tax computation under Section 67 of the Act.

Decision on the sustainability of the adjudication order:
Based on the legal precedents and interpretation of the relevant provisions, the Tribunal found the impugned adjudication order unsustainable and quashed it. The appeal was allowed without costs, indicating a favorable decision for the appellant.

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