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TMI Blog2021 (2) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner, by which the demand of service tax has been confirmed with interest and penalty. 2. The appellant is engaged in providing mining services to M/s Hindustan Copper Limited, HCL under two agreements dated April 24, 2009 and April 19, 2010. The agreements provided for the price payable to the appellant for such mining services. It is not in dispute that the appellant has discharged service tax liability on this amount. The agreements also provided that HCL shall provide certain items on free of cost basis to the appellant. The issue involved in this appeal is about the inclusion of the value of items supplied on free of cost basis by the service recipients to the appellant in the value of mining services provided by the appellant. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 22, 2016 to the aforesaid show cause notice and asserted that the value of the items supplied on free of cost cannot be brought within the ambit of the term "consideration" and, hence, cannot be included in the value of taxable services. 6. The Commissioner, however, by order dated November 29, 2016 confirmed the demand of service tax with penalty and interest. The relevant portion of the order passed by the Commissioner is reproduced below: "4.3 ***** ***** ***** ***** Thus, it is evident that the assessee while providing mining service to HCL, received free supply of certain items/facilities without which the taxable service could not have been rendered by them. It clearly indicates that in case the assessee had provided the same ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013 (32) STR 49 (Tri-LB), was found not to be applicable as it was concerned with construction services. 8. Shri B.L Narasimhan, learned counsel appearing for the appellant has made the following submissions: (i) The value of free of cost items provided by the service recipient, i.e HCL, to the appellant does not form part of the taxable value of mining service provided by the appellant. Valuation of taxable services is governed by section 67 of the Finance Act, 1994, the Finance Act. When service is provided for a consideration "not wholly or partly consisting of money‟, section 67(1)(ii) provides that the value shall be such amount in money, as with the addition of service tax charged, is equivalent to the consideration. The fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited by the appellant before the adjudicating authority but no finding has been recorded in the impugned order. In this regard, reliance has been placed on the following decisions : a. Damodar J Malpani vs. CCE, 2002 (146) ELT 483 (SC) b. Niraj Prasad vs. CCE & ST, 2019-tiol-3237-CESTAT-ALL c. Rosmerta Technologies Limited vs. CCE & ST, LTU, Delhi, 2020-TIOL-916-CESTAT-CHD; and (v) The extended period of limitation could not have been invoked or penalties imposed. 9. Dr. Radhe Tallo, learned Authorized Representative of the Department, however, submitted that there is no error in the order passed by the Commissioner and the issue involved in this appeal is covered by the decision of a Division Bench of the Tribunal in ABL Infrastru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal in Bhayana Builders before the Commissioner, which decision, as noticed above, was affirmed by the Supreme Court. The larger bench of the Tribunal had concluded that the value of goods and materials supplied free of cost by a service recipient to the provider of the taxable construction service, being neither monetary or non-monetary consideration, would be outside the taxable value of the "gross amount charged‟ within the meaning of section 67 of the Finance Act. 14. The decision of the larger bench of the Tribunal in Bhayana Builders and the decision of the Supreme Court in Bhayana Builders are clearly applicable to the facts of the present case inasmuch as the charge in the show cause notice is that the cost of material su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s contract'. As regard works contract the relevant provision under the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 reads as under : ***** ***** ***** From the above Explanation clause (a)(1) which can be seen that for the purpose of value of goods used in or in relation to the excecution of the works contract value of all the supplies which for a consideration or otherwise should be added. Therefore it is clear that whether the goods used by the service provider or otherwise supplied by the service recipient free of cost, value of all the goods should be included to arrive at the gross value of works contract. Therefore in our considered view the value of free supply material also be added in the gross valu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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