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2016 (4) TMI 596 - AT - Service TaxDemand of differential tax - Commercial or industrial construction service - non-inclusion of free supplies values in gross receipts before applying abatement of 67% allowed in notification no. 15/2004-ST, dated 10.9.2004. Held that:- there is no doubt that the value of free supplies has not been included for computing tax liability by the appellant. The logic of essentiality of the material so supplied by the recipient of service is not comprehensible; the terms of supply are merely matters of commercial agreement between the supplier and recipient of service. That its inclusion is mandated by the reference to 'gross amount' in section 67 of Finance Act, 1994 also does not find favour. 'Gross amount' is a much misused term in taxation of services arising from the convenient uncoupling from the qualifying phrase i.e. 'for taxable service'. We do not intend to delve deeply into this misconception; suffice it to say, that the use of 'gross receipts' is intended to enable coverage of non-monetised consideration. Mutually agreed upon compensatory payments that are not reflected in invoices are intended to be captured for computing tax liability. Service Tax (Determination of Value) Rules, 2006 flows from the legislative empowerment in section 67 of Finance Act,1994 and the tax collector does not have the authority to read beyond the Rules and to adapt the provisions of section 67 for devising a formula that is, in his mind, compatible with his sense of equity and harmony. The issue is squarely covered by the decision of this Tribunal in Bhayana Builders (P) Ltd v. Commissioner of Service Tax, Delhi [2013 (9) TMI 294 - CESTAT NEW DELHI (LB)], value of free supplies by service recipient do not comprise the gross amount charged under Notification No. 15/2004-ST, including the Explanation thereto as introduced by Notification No. 4/2005-ST. - Decided in favour of appellant
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