2018 (7) TMI 696

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..... e of free goods and materials supplied. The demand cannot sustain - appeal allowed - decided in favor of appellant.
Ms. Sulekha Beevi C.S., Member (Judicial) and Shri Madhu Mohan Damodhar, Member (Technical) Shri Akhil Suresh, Advocate for the Appellant Shri S. Govindarajan, AC (AR) for the Respondent ORDER Brief facts are that the appellant is engaged in providing taxable service under the category of Commercial or Industrial Construction Service to M/s. Shree Ambika Sugars Ltd. It was noticed that the appellant did not discharge service tax under the said category and show cause notice was issued proposing to demand service tax along with interest and also for imposing penalties. After due process of law, the original authority con .....

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..... It is also to be noted that in the case of Bhayana Builders (supra), the Hon'ble Supreme Court has considered the decision passed by it in Larsen & Toubro Ltd. reported in (2016) 1 SCC 170. The relevant paragraph is reproduced as under:- "13. A plain meaning of the expression 'the gross amount charged by the service provider for such service provided or to be provided by him would lead to the obvious conclusion that the value of goods/material that is provided by the service recipient free of charge is not to be included while arriving at the 'gross amount' simply, because of the reason that no price is charged by the assessee/service provider from the service recipient in respect of such goods/materials. This further gets strengthened fr .....

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..... y the service provider to the service recipient for the service rendered. The fact that it is an inclusive definition and may not be exhaustive also does not lead to the conclusion that the contract value can be ignored and the value of free supply goods can be added over and above the contract value to arrive at the value of taxable services. The value of taxable services cannot be dependent on the value of goods supplied free of cost by the service recipient. The service recipient can use any quality of goods and the value of such goods can vary significantly. Such a value, has no bearing on the value of services provided by the service recipient. Thus, on first principle itself, a value which is not part of the contract between the servi .....

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