2018 (12) TMI 502 - AT - Service Tax

Rectification of Mistake - includibility of value of material in aseessable value - Held that - The invoices for supply of material for the purpose of carrying out the service of Erection, Commissioning and Installation, is in the name of service recipient. Therefore, the material portion is not part and parcel of gross value of the service provided by the appellant. Therefore, the value of material which was purchased in the name of service recipient, cannot be added in the gross value of the service provided by the appellant. The value of material which was purchased in the name of service recipient, cannot be added in the gross value of the service provided by the appellant. Accordingly, the demand attributable to the material value raised by the lower authorities would not sustain and the same is set-aside - ROM Application allowed.

Summary

Issues: Rectification of mistake in the order related to the inclusion of material value in the gross value of service provided to M/s. Suzlon.

Analysis:
1. The applicant, represented by a Chartered Accountant, filed an application for rectification of mistake in the order. The issue pertained to the inclusion of material value in the gross value of service provided to M/s. Suzlon and whether the appellant should be liable for the demand attributable to the material value.

2. The Chartered Accountant argued that there were two contracts involved in the case, one with M/s. Larson & Tuobro and the other with M/s. Suzlon. He contended that the material supplied by the service recipient, M/s. Suzlon, for carrying out services should not be included in the gross value of the service provided. The appellant did not claim exemption under Notification No. 12/2003 as they did not purchase and sell the material to the service recipient. The Chartered Accountant requested that the appeal be allowed concerning the services provided to M/s. Suzlon.

3. The Deputy Commissioner (AR) representing the Revenue supported the original order and opposed any rectification, stating that it was unnecessary.

4. Upon careful consideration of submissions and records, the Tribunal found that in the case of service provided to M/s. Suzlon, the material was neither purchased nor sold by the appellant; instead, it was supplied by the service recipient for the services of Erection, Installation, and Commissioning. As the invoices for material supply were in the name of the service recipient, the material value should not be included in the gross value of services provided by the appellant. Consequently, the demand linked to the material value imposed by lower authorities was set aside, ruling in favor of the appellant regarding services provided to M/s. Suzlon.

5. The Tribunal allowed the rectification of mistake application in favor of the appellant concerning the exclusion of material value from the gross value of services provided to M/s. Suzlon, while confirming the order regarding services provided to M/s. Larson & Tuobro.