2011 (1) TMI 636 - AT - Service Tax

Application for abatement - Notification No. 15/2004-S.T., dated 10th September 2004, and Notification No. 18/2005-S.T., dated 7th June 2005 - Section 67 of the Finance Act specifically enumerated the items which were excluded from the value of the taxable service. There is no such exclusion w.e.f. of 18th April, 2006 - Rule clearly provides that where the value cannot be determined, equivalent money value of consideration which cannot be less than the cost of the provisions of taxable service, is required to be taken into account and value of taxable service is the total value of taxable service is the total amount of consideration consisting of all components of taxable service - The fact that it is not only the supplies made by the service provider or materials used by him which form a part of the service, but also other considerations which are non-monetary in nature, are also required to be taken into account - Appeal is disposed of

Summary

Issues:
Denial of abatement benefit due to exclusion of value of materials supplied free of cost by the promoter/service recipient for computation of taxable services.

Analysis:
The appeal arose from the Commissioner's order denying abatement benefit to the appellant for not including the value of materials supplied free of cost by the promoter/service recipient in the computation of taxable services. The appellant relied on various decisions to support their case, emphasizing that the value of goods or materials supplied by the service recipient cannot be included in the gross amount as per relevant notifications. However, the Joint CDR argued against this, citing a Tribunal decision that considered the explanation clause and provisions of Section 66 and 67 of the Finance Act, 1994, to support the authorities' orders.

The Tribunal noted that while a previous decision granted relief based on specific provisions of law before an amendment, the current scenario did not provide for such exclusions from the value of taxable service. The interpretation of the gross amount charged by the appellant was found to be inconsistent with Section 67 of the Finance Act, which requires consideration in monetary and non-monetary terms for determining the value of services. The Tribunal highlighted that all components of taxable service, including expenses incurred by the service provider, must be considered in the valuation process.

Regarding the decision of the Madras High Court, it was clarified that it provided interim relief based on a prima facie view, implying that no strong case for waiver of tax amount and interest was established. As per the settled law articulated in the Jaihind Projects case, the appellant was directed to deposit the tax amount and interest within eight weeks, while the penalty amount was waived pending the appeal's disposal.

In conclusion, the Tribunal upheld the denial of abatement benefit due to the exclusion of materials' value supplied free of cost in the computation of taxable services. The decision was based on a comprehensive analysis of relevant legal provisions and precedents, emphasizing the need to consider all aspects of service valuation as per the Finance Act and related rules.