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TMI Blog2018 (7) TMI 1530X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground that they had not included the value of free supply of material while arriving at the gross value charged for the services rendered and that the respondent is not eligible for abatement of Notification No. 01/2006 dated 01.03.2006. The Adjudicating Authority confirmed the demands raised along with interest and also imposed penalties. Aggrieved by such an order, an appeal was preferred before the First Appellate Authority. The First Appellate Authority relying upon the decision of Era infra Engineering Ltd., and P. Chandran case, held that inclusion of the value of the free supplied material by the service recipient cannot be included for the purpose of calculating taxable service and the benefit of Notification No. 01/2006 cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ench of Tribunal in the case of Bhayana Builders Pvt. Ltd., holding that cost of free supply of the goods should not be included for discharging the tax liability. Aggrieved by such an order, Revenue Authorities preferred civil appeals in the Apex Court and their Lordships in the case of Bhayana Builders Pvt. Ltd., [2018 (10) GSTL 118 (S.C.)] in paragraph Nos. 13 to 18 upheld the Tribunals reasoning. The ratio of Apex Court is reproduced: "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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o understand the contention: (c) "gross amount charges" includes payment by (c) cheque, credit card, deduction from account and any form of payment by issue of credit notes or debit notes and [book adjustment, and any amount credited or debited, as the case may be, to any account, whether called 'suspense account' or by any other name, in the books of account of a person liable to pay service tax, where the transaction of taxable service is with any associated enterprise.]" [emphasis supplied] 15. It was argued that payment received in 'any form' and 'any amount credited or debited, as the case may be...' is to be included for the purposes of arriving at gross amount charges and is leviable to pay service tax. On that basis, it was s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount charged" given in Explanation (c) to Section 67 only provides for the modes of the payment or book adjustments by which the consideration can be discharged by the service recipient to the service provider. It does not expand the meaning of the term "gross amount charged" to enable the Department to ignore the contract value or the amount actually charged by 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 67% was arrived at keeping in mind the totality of goods and materials that are used in a construction project. Therefore, it was incumbent upon the assessees to include the value of goods/material supplied free of cost by the service recipient as well otherwise it would create imbalance and disturb the analogy that is kept in mind while issuing the said notifications and in such a situation, the AO can deny the benefit of aforesaid notifications. This argument may look to be attractive in the first blush but on the reading of the notifications as a whole, to our mind, it is not a valid argument. 18. In the first instance, no material is produced before us to justify that aforesaid basis of the formula was adopted while issuing the noti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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