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2016 (4) TMI 1035 - AT - Service TaxIncludability - Cost of free supply of the materials for rendering Commercial or Industrial Construction Services - Appellant availed benefit of Notification No. 1/2006-ST - First appellate authority has tried to hair-split the facts and hold against the appellant by recording that provisions of Section 67 has under gone change w.e.f. 18-04-2006 - Held that - the arguments put for by the departmental representative and the findings recorded by the first appellate authority are not in consonance with the law as settled by the Larger Bench. The Larger Bench of the Tribunal considered the scope of pre and post amended provisions of Section 67 of the Finance Act,1994; and more specifically the substitution of section w.e.f. 18-04-2006 and came to a conclusion that value of free supply need not be included for discharge of service tax. Therefore, by following the judgment of Larger Bench in the case of Bhayana Builders (P) Ltd. VS. CST 2013 (9) TMI 294 - CESTAT NEW DELHI (LB) and decision of Principal Bench in the case of Hindustan Steel Works Construction Ltd. 2015 (6) TMI 378 - CESTAT NEW DELHI , the value of supply of free material should not be included for arriving at gross value for charging service tax liability. - Decided in favour of appellant
Issues involved:
Inclusion of cost of free supply of materials for rendering 'Commercial or Industrial Construction Services' under service tax liability. Analysis: The appeal was against Order-in-Appeal No. NGP/EXCUS/000/APP/147/14-15 dated 17/10/2014. The main issue was the inclusion of the cost of free supply of materials for providing 'Commercial or Industrial Construction Services'. The appellant relied on the judgment of the Larger Bench in the case of Bhayana Builders (P) Ltd. to support their case. The appellant argued that the first appellate authority wrongly interpreted the provisions of Section 67 post amendment on 18-04-2006. The departmental representative contended that the appellant had availed the benefit of Notification No. 1/2006-ST, making the Bhayana Builders (P) Ltd. judgment inapplicable. Upon reviewing the submissions and records, the Tribunal found that the arguments of the departmental representative and the findings of the first appellate authority did not align with the law established by the Larger Bench. The Larger Bench had analyzed the pre and post-amended provisions of Section 67 of the Finance Act, 1994, specifically the substitution of the section from 18-04-2006. The Tribunal concurred with the Larger Bench's conclusion that the value of free supplies need not be included for discharging service tax. The Tribunal also highlighted the Larger Bench's ruling that the value of goods and materials supplied free of cost should be excluded from the taxable value or the gross amount charged under Section 67 of the Finance Act, 1994. This principle was further upheld in the case of Hindustan Steel Works Construction Ltd. Based on the authoritative judicial pronouncements and precedents, the Tribunal held that the impugned order was unsustainable and set it aside, allowing the appeal in favor of the appellant. The operative order was pronounced in court, concluding the judgment.
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