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2016 (10) TMI 1248 - HC - Service TaxValuation - includibility - N/N. 1 of 2006 - whether the explanation to Item No. 7 in Notification no. 1 of 2006, issued by the respondent i.e. the sales tax department is enforceable in law in so far as it directs the inclusion of the value of free supplies used by a contractor in construction activity? - Held that:- The explanation to Item No. 7 of the Notification – which is been impugned in this case is worded in a neutral manner; it directs the inclusion of the gross value of the goods to the extent that goods are bought by the contractor, there can be no quarrel in its application. However, the problem in this case is that the petitioner claims that the goods were in fact supplied free of cost for the construction activity undertaken by its principle or the service recipient. In the light of the Intercontinental Consultants [2012 (12) TMI 150 - DELHI HIGH COURT] and Bhayana Builders [2013 (9) TMI 294 - CESTAT NEW DELHI (LB)], the petitioner’s grievance is well founded. It is accordingly held that in cases where goods are supplied free of cost by the service recipient to the construction contractor of the service provider, the value of such goods shall be excluded from the gross amount in terms of explanation to Item No. 7 of the Notification 1 of 2006. Petition allowed - decided in favor of petitioner.
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