2015 (9) TMI 584 - AT - Service Tax

Commercial or industrial construction services - Benefit of Notification No.15/2004-ST dated 10.9.2004 - abatement under Notification No.15/2004-ST - Held that - It has been held by the CESTAT in case of Bhayana Builders (2013 (9) TMI 294 - CESTAT NEW DELHI (LB)) that value of free supplies need not be included for claiming abatement under Notification No.15/2004-ST. In the wake of the said judgement, even the impugned demands would not be sustainable and consequently the question of penalty would be preposterous. Accordingly, notwithstanding the absence of the appellant, we are of the view that the penalties are not sustainable - Decided in favour of assessee.

Summary

Issues:
Appeal against imposition of penalty under section 78 of Finance Act, 1994 for availing benefit of Notification No.15/2004-ST without including value of material supplied free of cost by service recipient.

Analysis:
The appellant, a provider of commercial or industrial construction services, availed the benefit of Notification No.15/2004-ST by paying service tax on 33% of the gross value received. The primary adjudicating authority disallowed the benefit, citing non-inclusion of the value of material supplied free of cost by the service recipient. Consequently, demands of service tax, interest, and penalty under section 78 of the Finance Act, 1994 were confirmed. The appellant, while not disputing the payment of service tax and interest, contested the imposition of penalty on the grounds of a genuine belief that the gross amount charged did not include the value of free supplies for claiming abatement under the said notification.

In the absence of representation from the appellant, the learned DR referred to the CESTAT judgment in the case of Bhayana Builders Pvt. Ltd. vs. CST, Delhi-2013, where it was held that the value of free supplies need not be included for claiming abatement under Notification No.15/2004-ST. Relying on this precedent, the Tribunal found that the impugned demands were unsustainable in light of the judgment. Consequently, the Tribunal deemed the imposition of penalties as unwarranted and allowed the appeals.

Therefore, the Tribunal, considering the legal position established by the CESTAT judgment in Bhayana Builders case, held that the penalties imposed on the appellant were not sustainable. As a result, the appeals against the imposition of penalties under section 78 of the Finance Act, 1994 were allowed, providing relief to the appellant in this matter.