2023 (12) TMI 849 - AT - Service Tax

Entitlement to the benefit of cum tax value - non-production of evidence to the effect that the considerations received were inclusive of service tax - HELD THAT - It is apparent from the Special Conditions of the tender documents that the service tax was to be included in the rates quoted by the respondent in the tender document. It is for this reason that the Commissioner (Appeals) in the order dated March 15, 2011 had recorded that the appellant had received the gross amount inclusive of service tax and VAT during the period 2006-07 to 2008-09 and so the benefit of cum-tax was required to be given. It is, therefore, not possible to accept the contention of the Department that as the respondent is not entitled to the benefit of cum-tax value, the appeal filed by the Department assailing the finding should be allowed - In view of the fact that the respondent is entitled to the benefit of cum-tax value, the appeal filed by the Department will have to be dismissed as earlier the other two grounds raised in the appeal had not found favour of the Tribunal. Appeal dismissed.

Summary

Issues involved:
The appeal involves the following Issues:
1. Proper recording of the gross amount received for services in the impugned order for the year 2005-06.
2. Valuation of taxable service based on the gross amount, including the value of free-of-cost material supplied by the service recipient.
3. Entitlement to the benefit of cum-tax value due to lack of evidence showing that considerations received were inclusive of service tax.

Issue 1 - Proper recording of gross amount received:
The Tribunal had previously decided against the department on the first two issues raised. The Commissioner (Appeals) had found in favor of the appellant, relying on previous case laws and the correct discharge of Service Tax liability during the relevant period.

Issue 2 - Valuation based on gross amount including free-of-cost material:
The Commissioner (Appeals) had extended the benefit of cum-duty to the appellant based on the gross amount received, inclusive of service tax and VAT. This decision was supported by the tender documents submitted by the appellant, which included a provision stating that rates quoted should include all taxes applicable at the time of submission, with no separate claims entertained.

Issue 3 - Entitlement to cum-tax value:
The Supreme Court partly allowed the appeal, remanding the matter to the Tribunal for fresh adjudication on whether the appellant had supporting evidence to establish that considerations received were inclusive of service tax. The respondent submitted various documents, including tender documents and bills showing amounts inclusive of service tax, to support their claim for cum-tax value. The Tribunal considered the relevant materials and documents produced by the parties, ultimately dismissing the appeal by the Department as the respondent was found entitled to the benefit of cum-tax value.

This comprehensive summary highlights the key issues, decisions, and supporting evidence presented in the legal judgment.