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TMI Blog2016 (10) TMI 1248X X X X Extracts X X X X X X X X Extracts X X X X ..... ith its introduction of Section 65 (105) (zzq). Section 66 of the Finance Act, 1994 (the enactment having imposed the service tax levying in the first instance) alludes to rules and notifications issued from time to time as providing mechanism for the enforcement of the levy, its collection etc. In furtherance of its statutory mandate, the respondents issued the Notification no.1 of 2006. The petitioner/the Construction Contractor complains that explanation to item no. 7, in the table annexed to the said notification, requires that total amount of taxable turnover would include "the value of goods and materials supplied or provided or used by the service provider of construction service for providing that service" which in the opinion of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... option to avail an abatement of 67% from the gross amount charged vide notification No.1/2006-Service Tax dated 01.03.06 and pay service tax on 33% of the gross amount charged. Service provider availing abatement scheme can not take CENVAT credit. Thus, it may be seen that effectively service tax is payable on the value of the component of construction activity less the value of inputs. 7. As per Section 65(105)(zzq) the taxable service is defined as any service provided by any person to any other person in relation to commercial or industrial construction service. In the case of Advertising Club Vs. Central Board of Excise and customs 2001 (131) ELT 35 (Mad) it was held that tax is levied on 'service' provided to a client by advertisin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax has to be in consonance with Section 66 which levies a tax only on the taxable service and nothing else. There is thus in built mechanism to ensure that only the taxable service shall be evaluated under the provisions of 67. Clause (i) of sub-section (1) of Section 67 provides that the value of the taxable service shall be the gross amount charged by the service provider "for such service". Reading Section 66 and Section 67 (1) (i) together and harmoniously, it seems clear to us that in the valuation of the taxable service, nothing more and nothing less than the consideration paid as quid pro quo for the service can be brought to charge. Sub-section (4) of Section 67 which enables the determination of the value of the taxable service "in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Parliament would not confer validity on a rule if it is made not in conformity with Section 40 of the Act." Thus Section 94 (4) does not add any greater force to the Rules than what they ordinarily have as species of subordinate legislation." In Bhayana Builder (supra), the Tribunal was seized of the question which this court is called upon to consider in the present case i.e. whether the value of goods supplied by the principle to a contractor under the agreement, the value of free goods can be included in service tax turnover. The CESTAT noticed in Intercontinental Consultants and thereof in its ratio held as follows:- (vi) In Intercontinental Consultants and Technocrats Pvt. Ltd. v. Union of India [2013] 59 VST 487 (Delhi); [20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ract something more from him by including in the valuation of the taxable service other expenditure and costs which are incurred by the service provider in the course of providing taxable service. (vii) In the light of the clear legislative text, the unambiguous provisions of sections 66 and 67 of the Act and in the light of the judgment in Intercontinental Consultants and Technocrats Pvt. Ltd. [2013] 59 VST 487 (Delhi); [2013] 19 GSTR 462 (SC); [2013] 29 STR 9 (Delhi), the conclusion is compelling and inviolable that the value "free supplies" by a construction services recipient, for incorporation in the constructions would not constitute a non-monetary consideration to the service provider nor form part of the gross amount charged for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of taxable services; and as this is the only issue presented (on section 67 of the Act); we find no justification for a wider analysis of a speculative theatre, of potential conflict." xxx xxx ..... X X X X Extracts X X X X X X X X Extracts X X X X
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