TMI Blog2022 (3) TMI 1257X X X X Extracts X X X X X X X X Extracts X X X X ..... tue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax - thus, for the period prior to May 2015 the free supplies of material by the service recipient is not includable in the gross amount of service provided by the service provider i.e. the appellant. Therefore, whole of demand is not sustainable. Whether the services of erection commissioning and installation provided for distribution of electricity is exempt from payment of service tax under Section 66 of the Finance Act, 1994 or not? - HELD THAT:- The said service has been provided by the appellant for distribution of electricity which is exempt from payment of service tax as held by this Tribunal in the case of M/S UP RAJKIYA NIRMAN NIGAM LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, MEERUT-I [ 2015 (8) TMI 66 - CESTAT NEW DELHI] where it was held that the service tax payable on all services relating to transmission and distribution of electricity provided by the service provider to the service recipient is not required to be paid - thus, the services provided for distribution of power is exempt from payment of service t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the impugned order, the adjudicating authority has included the value of the towers, accessories and insulators and conductors for the purpose of working out total amount under the Composition Scheme and Valuation Rules and has demanded the differential service tax. The appellant discharged the service tax under the Works Contract (Composition Scheme for payment of service Tax) Rules, 2007upto 30.06.2012 and thereafter in terms of Rule 2A of the Service Tax (Determination of Value) Rules, 2006. As the appellant discharge service tax under Composition Scheme as the value of free supplies by the Power Grid sought to be included in gross services provided by the appellant, therefore, the impugned demand has been raised against the appellant by way of issuance of the show cause notice dated 18.10.2016 and adjudicated by including the value of free supplies by Power Grid for execution of the work. Against the said order, the appellant is before us. 4. The Ld. Counsel for the appellant submits that for the period prior to March 2015, the free supplies to material are not to be included in the assessable value has been held by the Hon ble Apex Court in the case of Union of India vs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not for providing such taxable service cannot a part of that valuation as that amount is not calculated for providing such taxable service .That according to us is the plain meaning which is to be attached to Section 67 (unamended, i.e., prior to May 01, 2006) or after its amendment, with effect from, May 01, 2006. Once this interpretation is to be given to Section 67, it hardly needs to be emphasized that Rule 5 of the Rules went much beyond the mandate of Section 67. We, therefore, find that High Court was right in interpreting Sections 66 and 67 to say that in the valuation of taxable service, the value of taxable service shall be the gross amount charged by the service provider for such service and the valuation of tax service cannot be anything more or less than the consideration paid as quid pro qua for rendering such a service. 25) This position did not change even in the amended Section 67 which was inserted on May 01, 2006. Sub-section (4) of Section 67 empowers the rule making authority to lay down the manner in which value of taxable service is to be determined. However, Section 67(4) is expressly made subject to the provisions of sub-section (1). Mandate of sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow's backward adjustment of it. Our belief in the nature of the law is founded on the bedrock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset. This principle of law is known as lexprospicit non respicit: law looks forward not backward. As was observed in Phillips v. Eyre [(1870) LR 6 QB 1] , a retrospective legislation is contrary to the general principle that legislation by which the conduct of mankind is to be regulated when introduced for the first time to deal with future acts ought not to change the character of past transactions carried on upon the faith of the then existing law. 29. The obvious basis of the principle against retrospectivity is the principle of fairness , which must be the basis of ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manner as may be prescribed, however, it is subject to the provisions of sub-sections (1), (2) and (3). Moreover, no such manner is prescribed which includes the value of free goods/material supplied by the service recipient for determination of the gross value. It was argued that payment received in any form and any amount credited or debited, as the case may be... is to be included for the purposes of arriving at gross amount charges and is leviable to pay Service Tax. On that basis, it was sought to argue that the value of goods/materials supplied free is a form of payment and, therefore, should be added. We fail to understand the logic behind the aforesaid argument. A plain reading of Explanation (c) which makes the gross amount charges inclusive of certain other payments would make it clear that the purpose is to include other modes of payments, in whatever form received; be it through cheque, credit card, deduction from account, etc. It is in that hue, the provisions mentions that any form of payment by issue of credit notes or debit notes and book adjustment is also to be included. Therefore, the words in any form of payment are by means of issue of credit notes or d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were liable to service tax under the said Finance Act, which were not being levied according to the said practice during the period upto 26th day of February, 2010 or all taxable services relating to transmission of electricity, and the period upto 21st day of June, 2010 for all taxable services relating to distribution of electricity. Now, therefore, in exercise of powers conferred by Section 11C of the Central Excise Act, 1944 (1 of 1944) read with Section 83 of the finance Act, the Central Government hereby directs that the service tax payable on the said taxable services relating to transmission and distribution of electricity provided by the service provider to the service receiver, which was not being levied in accordance with the said practice, shall not be required to be paid in respect of the said taxable services relating to transmission and distribution of electricity during the aforesaid period. [Notification No. 45/2010 I . Dated 20.07.2010] Thus, the service tax payable on all services relating to transmission and distribution of electricity provided by the service provider to the service recipient is not required to be paid. Therefore, we hold tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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