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2023 (9) TMI 457 - AT - Service TaxValuation - inclusion of value of free supply of material like steel pipes and valves supplied by M/s. GSPC Gas Company Limited to the appellants in the gross amount charged for the purpose of discharging service tax liability under Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 as amended by Notification No. 23/2009-ST dated 07.07.2009 - HELD THAT - As per the provisions of Section 67 of Finance Act, 1994 for the valuation of service on which service tax is to be charged, any consideration flown from the service recipient to the service provider either in the monetary form or in any other form which is not ascertainable such benefit which flow back to the service provider need to be included in the gross amount charged for levy of service tax - the consideration which is not received by the service provider shall not form part of taxable value under the term gross amount charged under Section 67 for levy of service tax. The issue is no longer res-integra as the matter has already been decided by Hon ble Apex Court in the case 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. It is clear from the above that the service tax is to be levied in respect of taxable services and for the purpose of arriving at 33% of the gross amount charged, unless value of some goods/materials is specifically included by the Legislature, that cannot be added. The impugned order-in-original set aside - appeal allowed.
Issues Involved:
1. Inclusion of free supply materials in the assessable value for service tax under Works Contract service. 2. Interpretation of "gross amount charged" under Section 67 of the Finance Act, 1994. 3. Applicability of the Supreme Court decision in CCE vs. Bhayana Builders (P) Limited. Summary: 1. Inclusion of Free Supply Materials: The department contended that the appellant did not include the value of free supply materials like steel pipes and valves in the assessable value for service tax under the Works Contract service. The show cause notice demanded Rs. 61,06,366/- in service tax, along with interest and penalties, for the financial years 2010-11 and 2011-12, based on Notification No. 23/2009-ST dated 07.07.2009. 2. Interpretation of "Gross Amount Charged": The appellant argued that the term "gross amount charged" should be interpreted per Section 67 of the Finance Act, 1994, which includes only the value of services and goods supplied by the service provider. They cited the Supreme Court decision in CCE vs. Bhayana Builders (P) Limited, which held that the value of free supply materials provided by the service recipient should not be included in the gross amount charged for service tax purposes. 3. Applicability of Supreme Court Decision: The Tribunal referenced the Supreme Court's ruling in CCE vs. Bhayana Builders (P) Limited, which clarified that the "gross amount charged" does not include the value of free supply materials provided by the service recipient. The Tribunal also noted that this precedent has been consistently followed in various other cases. Decision: The Tribunal concluded that the consideration not received by the service provider should not form part of the taxable value under Section 67 for service tax purposes. It set aside the impugned order-in-original and allowed the appeal, following the Supreme Court's decision in CCE vs. Bhayana Builders (P) Limited. Conclusion: The appeal was allowed, and the impugned order was set aside, affirming that the value of free supply materials provided by the service recipient should not be included in the assessable value for service tax under the Works Contract service. (Pronounced in the open court on 11.09.2023)
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