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TMI Blog2023 (4) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... y generated bills to the customers entirely for the labour charges which did not include either the value of raw materials supplied by the customers or the items used by them for fabrication of desired works in other words their bill contains only the labour charges as per verbal/ written agreement/ contract between them and their customers. They paid service tax after claiming abatement from the gross amount charged under Notification Nos. 19/2003-ST dated 21.08.2003, 15/2004-ST dated 10.09.2004 and Notification No. 1/2006-ST dated 01.03.2006 for the period 2005-06 to 2009-10 (upto September 2009). The case of the department is that : (i) The appellant have mis-declared the service inasmuch as their service includes Erection, Installation and Commissioning whereas the appellant have declared their service under Construction Service; (ii) The appellant have not included the value of material supplied by their clients in the gross value of the service for payment of service tax thus, they have violated the condition of notifications supra. Accordingly show cause notice dated 14.10.2010 was issued to the appellant wherein total service tax demand was raised on the gross value wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ahmd.)] (b) Collector of Central Excise vs. Chemphar Drugs & Liniments - [1989 (40) E.L.T. 276 (S.C.)] (c) Commissioner vs. Meghmani Dyes Intermediates Limited - [2013 (288) E.L.T. 514 (Guj.)] (d) Cosmic Dye Chemical vs. Collector of Central Excise, Bombay - [1995 (75) E.L.T. 721 (S.C.)] 3. Shri Rajesh K Agarwal, learned Superintendent (AR) appearing on behalf of the Revenue reiterates the findings of the impugned order. 4. On careful consideration of the submissions made by both the sides and perusal of record, we find that the main charge against the appellant for denial of exemption notifications which provide abatement from the gross value is that appellant have not included the value of materials provided by the service recipient. This issue now is no longer res-integra as in the various judgments including the judgment of Bhayana Builders (P) Limited (supra), the Tribunal has held that for availing abatement under notifications 19/2003-ST dated 21.08.2003, 15/2004-ST dated 10.09.2004 and Notification No. 1/2006-ST dated 01.03.2006, the value of the material provided by the service recipient to the service provider shall not be included in the gross value for the purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comprises the cost of material and 33% is the value of services. However, this figure of 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 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 language itself demolishes the argument of the Learned Counsel for the Revenue a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question of any exemption would arise." It is clear from the above that the service tax is to be levied in respect of 'taxable services' and for the purpose of arriving at 33% of the gross amount charged, unless value of some goods/materials is specifically included by the Legislature, that cannot be added. 20. It is to be borne in mind that the notifications in questions are exemption notifications which have been issued under Section 93 of the Act. As per Section 93, the Central Government is empowered to grant exemption from the levy of service tax either wholly or partially, which is leviable on any 'taxable service' defined in any of sub-clauses of clause (105) of Section 65. Thus, exemption under Section 93 can only be granted in respect of those activities which the Parliament is competent to levy service tax and covered by sub-clause (zzq) of clause (105) and sub-clause (zzzh) of clause (105) of Section 65 of Chapter V of the Act under which such notifications were issued. 21. For the aforesaid reasons, we find ourselves in agreement with the view taken by the Full Bench of CESTAT in the impugned judgment dated September 6, 2013 and dismiss these appeals of the Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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