2019 (9) TMI 1188 - AT - Service Tax

Works contracts service - exclusion of value of free supplies in assessable value - benefit of composition scheme - HELD THAT - The issue as to whether free supplies has to be included in the total taxable value for discharge of service tax liability, is decided by Hon ble Apex Court in the judgment of COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. 2018 (2) TMI 1325 - SUPREME COURT where it was held that the value of the goods/materials cannot be added for the purpose of aforesaid notification dated September 10, 2004, as amended by notification dated March 01, 2005 - appeal dismissed.

Summary

Issues:
Department's appeal against the order passed by the Commissioner regarding service tax demand, interest, and penalties in a works contract service case.

Analysis:
The Department filed an appeal against the order passed by the Commissioner, confirming the demand for short paid service tax, interest, and penalties against the respondents engaged in works contracts services. The original authority had quantified the demand while considering the benefit of the composition scheme for service tax payment and excluding the value of free supplies. The Department contested this decision, arguing that the lower authority erred in directing to re-quantify the demand after excluding free supplies.

The Department's representative, Shri G.V. Ramanaiah Shetty, Superintendent, appeared before the Tribunal and reiterated the grounds of appeal. The Tribunal noted that the first ground raised in the appeal was regarding the extension of the benefit of paying service tax under the composition scheme. The adjudicating authority had observed that the appellant had not availed CENVAT Credit and had exercised the option for the composition scheme, which was deemed procedural in nature.

Upon reviewing the records and hearing the Department's arguments, the Tribunal referred to the judgment of the Hon'ble Apex Court in the case of Bhayana Builders [2018(101) GSTL 118 (SC)], which addressed the issue of whether free supplies should be included in the total taxable value for service tax liability. The Tribunal, in line with the Apex Court's decision, concluded that the impugned order did not warrant any interference. Consequently, the Tribunal dismissed the appeal, upholding the decision of the lower authority.

In the absence of representation from the respondent/assessee, despite the publication of the list on the website, the Tribunal proceeded to make its decision based on the arguments presented by the Department. The judgment, delivered by Hon'ble Ms. Sulekha Beevi C.S, Member (Judicial), and Hon'ble Mr. P.V. Subba Rao, Member (Technical), emphasized the legal precedent set by the Apex Court and upheld the original authority's decision regarding the treatment of free supplies in the calculation of service tax liability in works contract services.