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TMI Blog2018 (8) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... axation Rules - the relevant period of demand in this show cause notice is 2007-2008 to 2011-2012 and the last mobilization advance was paid on 01.12.2010 - Held that:- It has been held in the case of Thermax Instrumentation Ltd., [2015 (12) TMI 1222 - CESTAT MUMBAI] that the advances received by the appellants are not receipts but are in the form of loan given to them and not a payment against invoice and service tax cannot be levied on them - In this case, although interest is not charged by the service provider he takes a counter guarantee in the form bank guarantee from the service provider for an equal amount while providing advance. The service recipient is free to encash the bank guarantee at any time. The cost of the bank guarantee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by M/s BGR to the appellant. The remaining 90% of the amount was paid based on the prorata progress of the work. In order to secure the advance paid by M/s BGR, the appellant gave a bank guarantee to M/s BGR. If the appellant fails to perform its obligations under the contract, M/s BGR can invoke the bank guarantee at any time and take back the advance. Thus, the said mobilization advance is only to ensure fulfillment of contractual commitments. During audit the officers felt that: a) the appellant had short paid an amount of service tax of ₹ 1,40,02,904/- by not including the value of free supply of materials; b) an amount of ₹ 43,781/- on mobilization advance amounts received should not be demanded from the appellant; a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Builders Pvt. Ltd., [2018 (10) GSTL 118 (S.C.)]. As far as the mobilization advance backed up by bank guarantee is concerned, it is his submission that this issue has been settled in the case of Thermax Instrumentation Limited Vs. CCE [2016 (42) STR 19 (Tri. Mumbai)] and it has been held that advance amount cannot be included in the assessable value for collection of the service tax. He, therefore, argued that both the amounts are not includible in the assessable value. 5. The Learned Departmental Representative, reiterated the arguments made in the Order-in-Original as far as the non-inclusion of cost of free supply of materials is concerned. As far as the second issue of mobilization advances is concerned, it is his contention that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Departmental Representative that if it is a free loan given to the assessee by the service recipient, interest thereon should be included of value in the taxable service. In this case, we find that although interest is not charged by the service provider he takes a counter guarantee in the form bank guarantee from the service provider for an equal amount while providing advance. The service recipient is free to encash the bank guarantee at any time. The cost of the bank guarantee is incurred by the appellant. We, therefore, find there is no case to add an amount of notional interest in the value of taxable services rendered. We therefore find that the demand on this account is also not sustainable. In conclusion, we find that the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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