2017 (2) TMI 1274 - AT - Service Tax

Valuation - includibility - diesel which was supplied free of cost to the respondent/assessee - Held that - the value of free supplies by the service receiver to the service provider is not includible in the gross amount charged by the service provider from the service receiver - demand set aside - appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against service tax demand for cargo handling services; Dispute regarding free supply of diesel to the service provider.

Analysis:
The appeal pertains to a dispute over the applicability of service tax on cargo handling services provided during a specific period. The Department contended that the services were subject to service tax, leading to the issuance of a show cause notice demanding service tax, penalty, and interest. However, the impugned order in appeal set aside this demand, prompting the Department to file the present appeal.

The main point of contention in the appeal revolved around the provision of diesel, supplied free of cost to the service provider. The Department argued that this free supply of diesel should be included in the gross amount charged for the services, relying on the order in original. Conversely, the respondent's counsel contended that the diesel was provided for a specified job, and the service provider neither used it for any other purpose nor allowed to take equipment outside the factory premises until the work was completed. Therefore, it was argued that the principal activity of providing services did not fall within the definition of Cargo Handling Service.

Upon hearing both parties and examining the records, the Tribunal found that the issue was decisively settled in favor of the appellant based on the precedent set by the CESTAT in previous cases. The Tribunal referenced the case law of CCE Vs. M/s S.B. Construction Pvt. Ltd. and highlighted that the value of free supplies by the service receiver to the service provider should not be included in the 'gross amount charged.' This legal position was further supported by similar views expressed in various other cases cited during the proceedings.

Consequently, the Tribunal concluded that there was no justification to interfere with the impugned order, which was sustained based on the established legal principles and reasons provided therein. As a result, the appeal filed by the Department was dismissed, affirming the decision of the lower authority.

In summary, the Tribunal's judgment upheld the impugned order, emphasizing the legal position that the value of free supplies should not be included in the gross amount charged for services, thereby dismissing the Department's appeal against the service tax demand for cargo handling services.