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2018 (5) TMI 878 - AT - Service TaxValuation - erection and commissioning or installation services - inclusion of the cost of material (structural sheet, pipe, plates, bolts, nuts, inserts, red oxide, free supply of water and electricity) supplied by the service recipient in the taxable value of service - Held that - the respondent-assessee have not sold any fabricated material to the service recipient. Therefore, the question of sale of the plant, machinery, equipment, parts and any other material as prescribed in the notification does not arise and hence, no value in the gross amount charged is includible, which is also evident from the contract in which it has been specifically provided that the raw material is being supplied free of cost, on job work basis - the cost of raw material supplied by the service recipient is not includible in the taxable value of service as defined under Section 67 of the Finance Act, 1994 - appeal dismissed - decided against Revenue.
Issues:
1. Inclusion of cost of material supplied by the service recipient in the taxable value of service. 2. Interpretation of Section 67 of the Finance Act, 1994 regarding taxable value of service. Analysis: 1. The Department filed an appeal against the order-in-appeal passed by the Commissioner (Appeals), Central Excise, Jaipur-II. The respondent-assessee provided 'erection and commissioning or installation' services to a company for a thermal power plant project. The Department claimed there was short payment of tax as the cost of material supplied by the service recipient was not included in the taxable value of service. The appellant argued that since the respondent did not sell any fabricated material to the service recipient, the value of supplied material should not be included in the taxable amount. The contract clearly stated that raw material was supplied free of cost on a job work basis, indicating no sale of goods by the appellant to the service recipient. 2. The Commissioner (Appeals) referred to various case laws and concluded that the cost of raw material supplied by the service recipient should not be included in the taxable value of service as per Section 67 of the Finance Act, 1994. Upon reviewing the facts and circumstances of the case, the Tribunal found no grounds to overturn the impugned order. Consequently, the Tribunal confirmed the decision of the Commissioner (Appeals) and dismissed the appeal filed by the Department. The judgment emphasized that the appellant did not sell any goods to the service recipient, leading to the exclusion of the cost of supplied material from the taxable value of service. This detailed analysis highlights the key issues of the judgment, focusing on the inclusion of the cost of material supplied by the service recipient in the taxable value of service and the interpretation of relevant provisions of the Finance Act, 1994.
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