2021 (7) TMI 1350 - AT - Service Tax

Availment of abatement benefit - inclusion of value of value of materials supplied by the clients free of cost, which have been used in providing Construction Services by the appellant, for calculation of abatement benefit - HELD THAT - The issue stands decided squarely in favour of the assessee by the Hon ble Supreme Court in the case of COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. 2018 (2) TMI 1325 - SUPREME COURT wherein it has been held that value of goods supplied free of cost by the clients are not required to be included for availing the abatement benefit in terms of the above notifications. The Apex Court in the aforesaid decision, while rejecting the appeal filed by the Revenue, has upheld the view taken by the Larger Bench of the Tribunal in M/S BHAYANA BUILDERS (P) LTD. OTHERS VERSUS CST, DELHI OTHERS. 2013 (9) TMI 294 - CESTAT NEW DELHI (LB) . The amount which has been paid in excess of the quantified demand by the Appellant may be refunded subject to quantification of the demand by the learned Adjudicating Authority. For the limited purpose of quantification of the demand, it is being remanded to the Ld. Adjudicating Authority - Appeal allowed by way of remand. Appeal is allowed by way of remand.

Summary

Issues:
- Disallowance of abatement benefit due to non-inclusion of value of materials supplied by clients
- Interpretation of abatement benefit under Service Tax Notifications
- Legal position on inclusion of value of goods supplied free of cost in availing abatement benefit

Analysis:
The appeal involved the disallowance of abatement benefit by the Department due to the non-inclusion of the value of materials supplied by clients in the gross amount charged by the appellant, a PSU engaged in construction projects. The Department raised a demand for Service Tax on the entire gross amount charged, challenging the appellant's availing of the abatement benefit during the period 2005-06 to 2007-08. The appellant contended that they had availed the abatement benefit as per Service Tax Notifications nos. 15/2004 and 01/2006, discharging Service Tax on 33% of the gross amount charged, excluding 67% as prescribed in the notifications.

The Tribunal referred to the legal position established by the Hon'ble Supreme Court in the case of Commissioner of Service Tax vs. Bhayana Builders (P) Ltd, where it was held that the value of goods supplied free of cost by clients need not be included for availing the abatement benefit. This decision was supported by the Larger Bench of the Tribunal and upheld by the Apex Court, setting a precedent for similar cases. The Hon'ble Delhi High Court in Era Infra Engineering Ltd vs. UOI further emphasized the exclusion of the value of goods supplied free of cost in determining the gross amount for availing abatement benefit.

Based on these legal precedents and consistent decisions by coordinate Benches of the Tribunal, the Tribunal concluded that the impugned demand disallowing the abatement benefit could not be sustained. The demand was set aside, and any excess amount paid by the appellant was to be refunded after quantification by the Adjudicating Authority. The appeal was allowed by remanding the matter to the Adjudicating Authority for quantification of the demand, and the Stay Petition was disposed of accordingly.