2018 (8) TMI 1107 - AT - Service Tax

Benefit of abatement - N/N. 1/2006-ST dated 1st March, 2006 - Construction services - inclusion of free of cost material - Held that - The inclusion of free of cost material while rendering the construction service is no more res-integra in view of judgment of Hon ble Supreme Court in the case of CST vs. Bhayana Builders (P) Ltd. 2018 (2) TMI 1325 - SUPREME COURT OF INDIA , where it was held that The value of the goods/materials cannot be added for the purpose of notification dated September 10, 2004, as amended by notification dated March 01, 2005 - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Whether the value of free of cost material should be included in the computation of gross amount for service tax purposes.
2. Validity of show cause notices issued by the Department.
3. Applicability of relevant judgments to the present case.

Analysis:
1. The appeal revolved around the inclusion of free of cost material in the valuation of construction services for service tax purposes. The respondent, engaged in construction services, received free materials like steel, cement, RMC, etc. The Department alleged non-inclusion of the value of these materials in tax calculations, leading to show cause notices and demands. The dispute centered on whether such material value should be considered in the gross amount for taxation. The Tribunal referred to the Supreme Court's decision in CST vs. Bhayana Builders and a previous Tribunal judgment, emphasizing that service tax should be based on the amount charged from the service recipient. The Tribunal concluded that including the value of free materials in the taxable amount was incorrect, as the service provider did not charge for these materials. Therefore, the appeal by the Revenue was dismissed.

2. The validity of show cause notices dated February 18, 2008, and March 15, 2012, was challenged by the appellant. These notices raised substantial demands against the respondent for the period between September 2004 to March 2007 and April 2007 to September 2011, respectively. However, the Tribunal found in favor of the respondent, highlighting the incorrectness of not including free materials in the taxable amount. Consequently, the orders under challenge were adjudicated in favor of the assessee, leading to the dismissal of the appeal by the Revenue.

3. The Tribunal extensively discussed the applicability of relevant judgments, particularly the Supreme Court's decision and the Tribunal's previous ruling on a similar matter. By analyzing the legal provisions and the essence of the notifications related to service tax valuation, the Tribunal determined that the issue was no longer res-integra. Relying on the legal interpretations and conclusions drawn from the mentioned judgments, the Tribunal dismissed the Revenue's appeal, affirming the decisions in favor of the respondent. This comprehensive analysis based on legal precedents and statutory provisions formed the basis for the Tribunal's final decision to uphold the orders in favor of the respondent.