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TMI Blog2018 (5) TMI 837X X X X Extracts X X X X X X X X Extracts X X X X ..... audit of the assessee, the following discrepancies came to light : (1) Non-inclusion of value of cost of materials supplied free of cost by the service recipient of the assessee in their taxable value. It appeared that assessee were charging service tax from their clients including the cost of free supply materials, however they were themselves discharging service tax only on the amounts received from the service recipient excluding the value of materials supplied free of cost. Department took the view that assessee have to pay service tax on gross amount received from service recipients and that they are not eligible for exemption provided under Notification No.1/2006-ST. Hence they have short paid amount of Rs. 1,20,74,688/- for the per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation No.01/2006-ST and confirmed a total amount of Rs. 1,09,61,287/- with interest and imposed equal penalty. While doing so, the adjudicating authority dropped the demand proposed in Annexure-II to the SCN on the taxability of construction service relating to educational institutions. He also dropped proposals in SCN to impose penalties under Section 76 and Section 77 ibid. Assessee has come in Appeal No.ST/43/2011 against the confirmation of tax demand and imposition of penalty under Section 78 ibid. Department has come in Appeal ST/181/2011 against the dropping of demand by adjudicating authority towards the CICS provided to educational institutions and also on dropping of penalties under Section 76 and 77. 3. Today when the matter ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in the taxable value with interest and penalties for the period from 1.10.2004 to 31.3.2009 iv) The adjudicating authority vide impugned order dt. 16.12.2010 confirmed the demand of service tax with interest and imposed equal penalty under Section 78 of the Act towards non-inclusion of value of free supply materials and non- inclusion of TDS amounts in the taxable value, however dropped demand of service tax of Rs. 41,09,392/- towards payments received from the educational institutions. They have filed appeal against confirmation of demand of service tax whereas Department has filed appeal against dropping of service tax demand of Rs. 41,09,392/- as well as dropping of penalties under Section 76 & 77 ibid. v) Ld. Advocate concedes tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs so long as fees / charges are collected for their activities; as clarified by Board‟s Circular dt. 28.01.2009 service tax is chargeable on the gross amount irrespective whether venture is profit making, loss making or charity oriented in its motive or its outcome. In the grounds of appeal, Department has also put forth their grievance on the non-imposition of penalty under Sections 76 & 77 of the Act by the adjudicating authority on the grounds that penalty is imposed under Section 78 of the Act equivalent to service tax demanded. Revenue argues that these are separate penalties and should have been imposed by the adjudicating authority. 4.2 On behalf of the department, Ld. A.R Shri A. Cletus supports the impugned order in respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set aside that part of the impugned order confirming the tax demand on this score. So ordered. 9. Coming to the demand of service tax on the TDS amounts and not included by the assessees, there is no doubt that these amounts are required to be included in the assessable value, a fact also conceded by the Ld. Advocate. We find some merit in the submission of the Ld. Advocate that they would be eligible for 67% abatement on the amount of TDS and accordingly the service tax liability is required to be re-quantified. In the event, we hold that the demand on this count will require to be remanded to adjudicating authority for examining the claim of assessee on the eligibility of abatement in the value of taxable service. So ordered. 10. Comin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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