2008 (10) TMI 181 - AT - Service Tax

Applicant is providing the Service of Commercial/Industrial Construction and were availing the benefit of Notification No. 15/2004-S.T - revenue wants to add the value of construction material supplied free by the recipient for grant of the benefit of the notification - applicant submitted that HC in the case of Larsen & Toubro Ltd. and Era Infra Engineering Ltd. v. U.O.I. held that the gross amount charged shall not include the free supply of the material - In view of the above decision, Stay petition is allowed

Summary

Issues:
1. Waiver of pre-deposit of service tax amount and penalty based on the interpretation of Notification No. 15/2004-S.T.
2. Inclusion of the value of construction material supplied free by the recipient for grant of the benefit of the notification.

Analysis:
The Appellate Tribunal CESTAT, New Delhi heard an application for the waiver of pre-deposit of service tax amount and penalty totaling Rs. 1,87,63,988/- concerning the interpretation of Notification No. 15/2004-S.T. The applicant, engaged in construction services, claimed the benefit of the notification. The dispute arose as the revenue sought to include the value of construction material supplied free by the recipient in the gross amount charged for service tax liability calculation. The applicant relied on judgments of the Hon'ble Madras High Court and Hon'ble Delhi High Court in cases where it was held that the gross amount charged should not encompass the free supply of material by the service recipient.

The revenue contended that the Hon'ble Delhi High Court had only granted a stay in a similar case, and the writ petition was pending. However, the Tribunal noted that the Hon'ble Delhi High Court in the case of Era Infra Engineering Ltd. had ruled that the free supply of material should not be considered for determining taxable service under the notification. Consequently, the Tribunal decided to waive the pre-deposit of the service tax amount and penalties based on the Delhi High Court's decision. The stay petition was allowed, with both parties having the liberty to mention further after the receipt of the High Court's final order on the matter. The decision was dictated and pronounced in open court by the Vice-President of the Tribunal.