2017 (1) TMI 1606 - AT - Service Tax

Commercial or Industrial Construction Service - case of Revenue is that the gross amount received during the year 2005-06 towards rendering service has not been properly recorded in the impugned order - Held that - The Revenue has not submitted any supporting evidence against such factual findings. Valuation - case of Revenue is that the valuation of taxable service should be based on gross amount including the value of free of cost material supplied by the recipient of service - Held that - The details of RA bills were examined by the lower authority, who categorically recorded that the amount received by the respondent has been correctly recorded in the books of accounts. Further, the details of payment received from contractor is already with the Department. The legal/court dispute between the respondent and the recipient of service has also been noted - the Tribunal held the value of free materials supplied by the recipient of service cannot form part of taxable service as held in Bhayana Builders 2013 (9) TMI 294 - CESTAT NEW DELHI (LB) . Benefit of cum-tax value - benefit cannot be extended as the respondent did not produce any supporting evidence to the effect that the considerations received were inclusive of service tax - Held that - The respondent have not produced evidence to the effect that the considerations received were inclusive of service tax. In order to consider the amount received as inclusive of service tax in terms of Section 67(2) of the Finance Act, 1994, it is necessary to show that the gross amount charged by a service provider is inclusive of service tax payable. In absence of such evidence, cum-tax benefit cannot be extended. The respondent have to discharge service tax involved in the present case on the value received and provisions of Section 67(2) are not available for determining the amount of tax - appeal disposed off.

Summary

Issues:
- Appeal against order of Commissioner (Appeals) regarding service tax liability for the period 2005-2006 to 2008-2009.
- Proper recording of gross amount received for services rendered.
- Valuation of taxable service based on gross amount, including value of free material.
- Extension of cum-tax benefit without evidence of considerations being inclusive of service tax.

Analysis:

The judgment involves an appeal against the order of the Commissioner (Appeals) regarding service tax liability for the period 2005-2006 to 2008-2009. The Revenue contested three main issues. Firstly, they argued that the gross amount received for services rendered in 2005-06 was not accurately recorded. However, the lower authority had already reconciled and recorded the taxable value, attributing any discrepancies to escalation costs. The Revenue failed to provide evidence to contradict these findings. Secondly, the valuation of taxable service was challenged, claiming it should include the value of free material supplied by the recipient. Nonetheless, the lower authority had verified the receipts and confirmed their accuracy. The Tribunal also referenced a previous case, Bayana Builders, to support the exclusion of free materials from taxable service value. Lastly, the Revenue disputed the extension of cum-tax benefit, alleging the lack of evidence showing that considerations received were inclusive of service tax. The Tribunal emphasized the necessity of such evidence under Section 67(2) of the Finance Act, 1994, and denied the benefit due to the absence of proof.

In conclusion, the Tribunal ruled that the respondent must discharge the service tax liability based on the value received, as Section 67(2) provisions were not applicable for tax determination. The judgment upheld the findings of the impugned order on all issues except for the cum-tax benefit extension, which was denied due to insufficient evidence. The appeal by the Revenue was disposed of accordingly on 5th January 2017.