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TMI Blog2018 (12) TMI 875X X X X Extracts X X X X X X X X Extracts X X X X ..... clients including M/s. Keppel Land, M/s. Keppel Purvankara and M/s. SAP Lab Café Expansion. On conduct of audit, the department contended that the appellants have not included the value of reinforcement steel and cement received free of cost from M/s. Keppel Land for the period April 2007 to August 2007 and from M/s. Keppel Purvankara during the period April 2007 to March 2010, in the taxable value of the service. It was also contended that the appellants have supplied ready mix concrete to their clients i.e., M/s. SAP Lab Café Expansion, SAP Lab Facade and that they have not included the cost of the same while arriving the taxable value. The department issued a show-cause notice 16.11.2010 seeking to demand service tax of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. In view of the amended provision, scope is wide enough to cover the material supplied by customer as well as service provider into taxable value for determination of service tax amount of demand, interest and penalty." 2.1 The learned counsel contended that the issue of includability of the value of items supplied free of cost by the customers is no longer res integra as the Hon'ble Apex Court has decided the issue in favour of the appellants in the case of Commissioner of Service Tax vs. Bhayana Builders Pvt. Ltd.: 2018 (10) GSTL 118 (SC) wherein it was upheld that the value of goods/materials supplied by the service receivers on FOC basis in relation to the construction shall not be added for the purpose of computation of the gross ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service tax is payable has to satisfy the following ingredients. "a. Service tax is payable on the gross amount charged :- the words "gross amount" only refers to the entire contract value between the service provider and the service recipient. The word "gross" is only meant to indicate that it is the total amount charged without deduction of any expenses. Merely by use of the word "gross" the Department does not get any jurisdiction to go beyond the contract value to arrive at the value of taxable services. Further, by the use of the word "charged", it is clear that the same refers to the amount billed by the service provider to the service receiver. Therefore, in terms of Section 67, unless an amount is charged by the service provider t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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. In fact, the Hon'ble Supreme Court has observed at para 18 as follows: "18. In the first instance, no material is produced before us to justify that aforesaid basis of the formula was adopted while issuing the notification. In the absence of any such material, it would be anybody's guess as to what went in the mind of the Central Government in issuing these notifications and prescribing the service tax to be calculated on a value which is equivalent to 33% of the gross amount. Secondly, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the taxable value of the service. In deference to the ratio of the judgment cited above, we find that the appellants are justified in not including the cost of reinforcement steel and cement supplied by their clients M/s. Keppel Land, M/s. Keppel Purvankara. Therefore, the confirmation of duty of Rs. 1,85,67,985/- in this regard is liable to be set aside. When the demand itself does not survive, interest and penalty would consequentially go. 4.3 Coming to the issue of levy of equal penalty in respect of RMC cleared by the appellants to M/s. SAP Lab, the appellants have paid the service tax along with interest before the issuance of show-cause notice. They have submitted that they have no mala fide intention to evade payment of duty and as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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