2018 (6) TMI 1488 - AT - Service Tax

Commercial or industrial construction service - benefit of abatement under N/N. 1/2006-ST dated 01.03.2006 - receipt of free supply from the service recipient - Held that - Identical issue decided in the case of M/S BHAYANA BUILDERS (P) LTD. & OTHERS VERSUS CST, DELHI & OTHERS 2013 (9) TMI 294 - CESTAT NEW DELHI (LB) , where it was held that Value of free supplies by service recipient do not comprise the gross amount charged under Notification No. 15/2004-ST, including the Explanation thereto as introduced by N/N. 4/2005-ST. - benefit of abatement cannot be denied - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Challenge to Order in Appeal No. 43/2015 dated 05.02.2015 regarding abatement claim under Notification No. 1/2006-ST.
2. Denial of abatement benefit due to receipt of free supply material.
3. Reliance on the decision of the Larger Bench in the case of Bhayana Builders.
4. Appeal by Revenue on the ground of challenge to the decision of the Larger Bench before the Hon’ble Supreme Court.

Analysis:
1. The appeal filed by Revenue contested the Order in Appeal No. 43/2015 dated 05.02.2015, challenging the abatement claimed under Notification No. 1/2006-ST by the respondent engaged in commercial or industrial construction services. Revenue observed that the appellant paid service tax on 33% of the taxable value and also received free supply material like cement and steel from the service recipient. The lower authority upheld the abatement benefit despite the free supplies. The Commissioner (Appeals) relied on the decision of the Larger Bench in the case of Bhayana Builders 2013(32) STR 49-T(LB).

2. During the hearing, the representative of Revenue appeared, but no one represented the respondent. The Tribunal noted that the decision of the Larger Bench in the Bhayana Builders case was subsequently upheld by the Hon’ble Supreme Court as reported in 2018 (10) GSTL 118 (S.C.). Thus, the Tribunal found no fault in the Commissioner (Appeals) order, which was upheld, leading to the rejection of the Revenue's appeal.

3. The Tribunal's decision was based on the Supreme Court's validation of the Larger Bench's ruling in the Bhayana Builders case. The appeal by Revenue was dismissed as the Supreme Court's decision confirmed the applicability of abatement benefits despite receiving free supply materials. This outcome highlights the importance of legal precedents and the binding nature of higher court decisions on lower tribunals.

4. The case underscores the significance of legal interpretations and the impact of higher court rulings on lower tribunal decisions. The appeal process demonstrated the interplay between statutory provisions, notifications, judicial decisions, and their application in specific factual scenarios. The adherence to legal principles and precedents ensures consistency and predictability in tax matters, guiding both taxpayers and tax authorities in their respective positions and obligations.