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2014 (8) TMI 627 - AT - Service TaxValuation - inclusion of material supplied by the customers - Commercial and Industrial Construction service - Works Contract Service - Penalties under Section 76, 77 and 78 - Held that:- value of gods and material supplied free of cost by the service recipient to the provider of taxable construction service, being neither monitory or non-monitory construction paid by or flowing from the service recipient, occurring to the benefit of service provider, would be outside the taxable value or the gross amount charges, within the meaning of later expression in Section 67 of the Finance Act, 1994 and these free supplies do not comprise the gross amount charged under Notification no. 15/04-ST including the explanation thereto as introduced by Notification 4/05-ST. Therefore, we hold that these demands are not sustainable at all. Demand has been confirmed for the value of material supplied by the customers under the category of Works Contract Service. As per Notification 23/09 dated 07.07.2009 shall not be included where works has been commenced prior to issuance of the said Notification. As submitted by the counsel for the appellant that out of 10 contracts, in 3 contract work has been commenced before 07.07.2009 where service tax on free material supplied is not leviable. This fact is to be verified from the records. Therefore, it needs examination at the end of the Adjudicating Authority to ascertain the fact that if the work has commenced prior to 07.07.2009 the free supply of material may not be includable in the taxable service. Therefore, free supply of material shall not be includable in the taxable service under the category of Works Contract Service. Demand has been confirmed on the basis of figures of Profit & Loss Account during October 2007 to March 2012 under the category of Commercial and Industrial Construction service, Erection, Commissioning or Installation Service. In the impugned order, no classification has been provided and it has not been specified why the service tax is payable under these categories. Moreover, the value of service tax paid by the appellant is shown in Profit & Loss Account figures in the gross value of service provided. Further, till 31.3.2011, the service tax was payable on realisation basis. In these circumstances, the Adjudicating Authority requires verification/examination of the documents to ascertain the correct liability of service tax payable by the appellants - matter remitted back - Decided in favour of assessee.
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