2017 (3) TMI 1370 - AT - Service Tax

Valuation - works contract - whether the free of cost material provided by the service receiver is required to be included in assessable value? - Held that - an identical issue has come up before the Larger Bench of this Tribunal in the case of Bhayana Builders (P) Ltd. vs Commissioner of Service Tax, Delhi, 2013 (9) TMI 294 - CESTAT NEW DELHI (LB) , wherein the free material supplied by the service receiver was not included in the cost of the works contract. Disallowance of Composition Scheme for works contract service - Held that - the issue has come up for consideration before this Tribunal in the case of Ahluwalia Contracts (I) Ltd. vs Commissioner of Central Excise, 2015 (7) TMI 855 - CESTAT NEW DELHI , wherein the Tribunal has remanded the matter to the adjudicating authority for de novo adjudication. Denial of exemption to the services provided to the SEZ Unit - Held that - exemption under N/N. 4/2004-ST dated 31.03.2004 requires the approval of the SEZ developer/unit. The said approval was submitted by the assessee-Appellants, but the lower authorities have not taken any cognizance - matter needs remand for reconsideration. Appeal allowed by way of remand.

Summary

Issues:
1. Inclusion of free of cost material in works contract cost.
2. Switching to 'Works Contract' for ongoing contract as on 01.06.2007.
3. Denial of exemption to services provided to the SEZ Unit.

Analysis:
1. The appeal involves a dispute regarding the inclusion of free material provided by the service receiver in the works contract cost. The assessee argued that the material supplied without any cost should not be included. Citing precedents, the Tribunal decided in favor of the assessee, setting aside the impugned order and allowing their claim.

2. The next issue pertains to the assessee's attempt to switch to 'Works Contract' for an ongoing contract as of 01.06.2007. The lower authorities denied this switch due to the Composition Scheme for Payment of Service Tax Rules, 2007. Referring to previous cases, the Tribunal remanded the matter to the adjudicating authority for de novo adjudication with specific directions regarding the classification of services and the availability of exemptions.

3. The final grievance concerns the denial of exemption to services provided to the SEZ Unit. The Tribunal noted that the exemption under Notification No. 4/2004-ST dated 31.03.2004 required approval from the SEZ developer/unit. Although the approval was submitted by the assessee, the lower authorities did not consider it. The Tribunal set aside the impugned order and remanded the issue to the adjudicating authority for a fresh examination of the approval and a decision after providing the assessee with a reasonable opportunity to present necessary evidence.

In conclusion, the Tribunal ruled in favor of the assessee on all three issues, setting aside the impugned order and remanding the matters for further adjudication based on the specific directions provided in each case.