2016 (7) TMI 1401 - AT - Service Tax

Valuation - includibility - value of the free supply diesel by the recipient of the service - Held that - similar issue decided in the case of CCE Bhopal Versus M/s SB. Earth Movers Pvt. Ltd. 2014 (11) TMI 872 - CESTAT NEW DELHI where it was 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 - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Service tax liability on the value of free supply diesel by the recipient of services.
- Applicability of including free supplies in the gross amount charged for services.

Analysis:
- The judgment addresses the issue of service tax liability concerning the value of free supply diesel by the recipient of services. The appellant was engaged in providing various services to a company, and service tax was confirmed against them based on the inclusion of the value of free diesel supply in the services rendered. The Tribunal referred to a previous case involving similar circumstances and held that the value of free supplies by the service receiver should not be included in the 'gross amount charged' by the service provider. This decision was based on a Larger Bench ruling, establishing that such inclusions were not required. Consequently, the demand for service tax based on the value of free diesel supply was deemed unsustainable, leading to the appeal being allowed with consequential relief.

- The judgment highlights the significance of legal precedents and the application of established principles in resolving tax-related disputes. By citing a relevant case law and emphasizing the decision of a Larger Bench, the Tribunal clarified the interpretation of including free supplies in the gross amount charged for services. This approach not only provided a clear rationale for the decision but also ensured consistency in the application of tax laws. The ruling ultimately favored the appellant by setting aside the impugned order and granting relief based on the established legal principles. The judgment underscores the importance of legal interpretations and precedents in adjudicating tax matters, thereby promoting fairness and uniformity in tax assessments and liabilities.