2013 (12) TMI 795 - AT - Service Tax

Demand of service tax - Value of such taxable service - electricity is supplied free of cost by the service receiver Held that - electricity is required for rendering the service of operation and maintenance of the plant, then the cost of supply of electricity is a consideration for the service rendered and such cost will have to be included in the value of the taxable services rendered - issue is prima facie covered in favour of the assessee, we find no justification in directing to deposit them any part of the demand and penalty - Stay granted.

Summary

Issues:
1. Inclusion of free supplied items by the service recipient in the assessable value of mining services provided.
2. Applicability of precedent cases in determining the assessable value.
3. Granting of stay in cases involving inclusion of free supplied items in the assessable value.

Analysis:
1. The judgment addresses the issue of whether the value of diesel procured by the service provider from the recipient for running machinery in mining services should be added to the assessable value. The Tribunal referred to the decision of the Hon'ble Bombay High Court in the case of Inox Air Products Ltd. v. CCE, Nagpur. The Tribunal rejected the differentiation made by the Departmental Representative (DR) between maintenance services and mining services, emphasizing that the ratio of law should be followed regardless of the type of goods or services involved.

2. Additionally, the Tribunal cited the decision of the Hon'ble Delhi High Court in the case of Cycle Line Infratech Pvt. Ltd., where stays were granted in similar cases involving the inclusion of free supplied items in the assessable value of services. The Tribunal found that the issue was prima facie covered in favor of the assessee, leading to the decision to dispense with the condition of pre-deposit during the appeal and allow the stay petition.

3. The judgment also considered the DR's reliance on the Tribunal Bangalore decision in the case of VPR Mining Infrastructure Pvt. Ltd. The Tribunal highlighted that the Bangalore decision was a stay order, while the Bombay High Court's decision was final. Moreover, the Bangalore decision predated the Delhi High Court's decision, which the Bangalore Bench did not have the opportunity to consider. This comparison further supported the Tribunal's decision to grant the stay in the present case.

In conclusion, the judgment provides a detailed analysis of the legal principles and precedents governing the inclusion of free supplied items in the assessable value of services, ultimately ruling in favor of the assessee and allowing the stay petition without requiring any deposit of the demand and penalty amount.