2024 (6) TMI 44 - AT - Service Tax

Liability to pay service tax on free supplies of material provided by service recipient - HELD THAT -As the issue has already been settled on the similar facts in the case of Vantage International Management Company 2021 (2) TMI 564 - CESTAT MUMBAI wherein it has been held that free supplies of materials is not to be included in the assessable value of services provided by an assessee, therefore, following the said decision, we hold that appellant are not required to include the free supplies of materials provided by the service recipient. In taxable value of service. Thus, we do not find any merit in the impugned order and the same is set aside. In result, the appeal is allowed, with consequential relief, if any.

Summary

Issues Involved:
Appeal against demand of service tax on free supplies of material provided by service recipient.

Facts:
- Appellant providing taxable services and receiving mining contracts and work orders.
- Revenue demanding service tax on free supplies of material not included in taxable value.

Appellant's Argument:
- Explanation (a)(ii) of Section 67 not applicable as no reimbursement was charged.
- Citing precedent cases Commissioner of Service Tax v. Bhayana Builders Pvt. Ltd. and Vantage International Management Company v. Commissioner of CGST.

Revenue's Position:
- Supporting the impugned order demanding service tax.

Judgment:
- Tribunal considered whether free supplies of materials should be added to taxable value.
- Referring to Vantage International Management Company case, where it was held that free supplies need not be included in assessable value.
- Relying on Bhayana Builders case, emphasizing that the value of goods/materials provided free of cost need not be included in the gross amount charged for taxable services.
- Concluding that the impugned order demanding service tax on free supplies of materials is not valid.
- Setting aside the impugned order and allowing the appeal.