Valuation in case of free services - Service Tax Practice Manual / Ready Reckoner - Service Tax

Where services are provided free of cost Section 66 of the Act provides that services are chargeable at the rate of 14% (plus cess) on the value of taxable services. Therefore, if there is no value, there is no service tax. Also see paragraph no. 5 of the circular no. 62/11/2003 ST dated 21/8/2003 . However, since all the previous circulars on Valuation has been withdrawn, is it correct to say that free services are not liable to tax even after withdrawal of circulars? The answer is yes in view of the author. The free services are still not liable to service tax However in case of Bharti Airtel Ltd. vs. CIT -2013 (7) TMI 182 - CESTAT NEW DELHI , it was found that No nexus with evidence was established by appellant that its case falls under free calls provided were exclusively meant for providing any taxable output service - the language of the policy does not grant immunity to the appellant when substance of the matter is looked into there was a planned evasion made by the Appellant in the name of employees phone policy and assessable value of free calls escaped taxation. Merely creating a fiction of no consideration received by the appellant in respect of the aforesaid nature of free service provided by it, the appellant appears to have been immensely benefited by reduction of monetary package of remuneration to its eligible, employees, their relatives and employees of Bharti Group of companies. Such undisclosed benefit of appellant was at the cost of Revenue. The appellant failed in the course of hearing to satisfy that value of service were disclosed perquisite to its employees in its account and disclosed to Income tax Authority. Separate proceedings to be initiated in relation to the services provided by the appellant in different states. Stay application two third amount of service tax was ordered to be submitted stay granted partly.