2015 (12) TMI 145 - AT - Service Tax

Demand of service tax - claim of benefit of abatement where cost of free supplies are not included in the value - works contract - benefits of Notification Nos.15/2004-ST, dated 10.9.2004 and 18/2005-ST dated 7.6.2005 - Held that - The impugned adjudication order confirms the demand indicated above on the basis that the presumptive value of the free supplies is also a consideration received for the rendition of the services and that this component and non-disclosure of this component disentitles availment of the benefits of Notification Nos.15/2004-ST, dated 10.9.2004 and 18/2005-ST dated 7.6.2005 - issue is covered by the decision of the Larger Bench of this Tribunal in Bhayana Builders (P) Ltd. vs. C.S.T., Delhi - 2013 (9) TMI 294 - CESTAT NEW DELHI (LB) . No other issue fall for consideration is also admitted. - Decided in favour of assessee.

Summary

Issues: Service tax demand on free supplies received for incorporation into works executed; Availment of benefits of Notification Nos. 15/2004-ST and 18/2005-ST.

Analysis:

1. Service Tax Demand on Free Supplies:
The appellant provided construction services during the period in question, receiving certain materials free of cost for incorporation into works executed for the benefit of the recipients. The service tax demand of Rs. 1,11,02,564 was confirmed by the Commissioner of Service Tax, New Delhi, based on the non-disclosure of the presumptive value of the free supplies. The impugned adjudication order considered the presumptive value of the free supplies as part of the consideration received for the services rendered, leading to the disentitlement of the benefits under Notification Nos. 15/2004-ST and 18/2005-ST. However, the Tribunal found that the legal position on this issue was settled by the decision of the Larger Bench in Bhayana Builders (P) Ltd. vs. C.S.T., Delhi, where it was established that the presumptive value of free supplies cannot be considered as part of the consideration for the services provided.

2. Availment of Benefits of Notifications:
The appellant had availed benefits under Notification Nos. 15/2004-ST and 18/2005-ST while remitting tax on the disclosed consideration for the services provided. The impugned adjudication order disallowed the availment of these benefits due to the non-disclosure of the presumptive value of the free supplies. However, the Tribunal, relying on the decision in Bhayana Builders (P) Ltd. case, held that the impugned adjudication order was unsustainable in this regard. The Tribunal quashed the order, noting that the appellant had already deposited the tax demand amount and directed for the refund of the remitted tax to the appellant in accordance with the law.

In conclusion, the Tribunal allowed the appeal, setting aside the service tax demand on free supplies and upholding the appellant's entitlement to the benefits under Notification Nos. 15/2004-ST and 18/2005-ST. The decision was based on the legal position established by the Larger Bench, emphasizing that the presumptive value of free supplies cannot be considered as part of the consideration for taxable services provided.