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2019 (5) TMI 1233 - AT - Service TaxValuation - charge for the diesel reimbursed by the service recipients - Management, Maintenance and Repair Service - Business Auxiliary Service - Section 67(1) of the Act read with Rule 5 of the Service Tax (Determination of Value) Rules, 2006 - HELD THAT:- The appellants were required to perform various services including diesel filing. It needs to be remembered that the scope of this service was limited to the activity of “filling” the diesel in DG sets for which the appellants were paid service fee of ₹ 500/- or ₹ 750/- per site. The diesel was to be procured from the filling stations authorised by the service recipients and the value of diesel was paid to the appellants only upon appropriate verification. The value of diesel was in the nature of reimbursement. The appellants had paid service tax on the element of service involved in “filling of diesel” and by no stretch of imagination it can be urged that any “service” was rendered by the appellants corresponding to the value of diesel. The valuation of taxable service for charging service tax could only be the gross amount charged for providing such “taxable services” which in the present case is the filing of diesel and any other amount cannot be a part of the valuation as it cannot be an amount for such “taxable services.” The Department cannot go beyond the contract value and arrive at the value of taxable service merely because of the use of the word “gross” in Section 67 of the Act. The use of the word “charged” makes it clear that it refers to the amount billed by the service provider to the service recipient and, therefore, unless an amount is charged by the service provider to the service recipient, it does not enter into the equation for determining value on which service tax is payable as was observed by the Supreme Court in CST, DELHI VERSUS M/S. BHAYANA BUILDER PVT. LTD. [2018 (5) TMI 721 - CESTAT NEW DELHI]. The cost of free supply of goods provided by the service recipients to the service provider is neither an amount “charged” by the service provider nor can it be regarded as a consideration for the service provided by the service provider. It has no nexus with the taxable services for which value is sought to be determined. The impugned order relies upon Rule 5(1) of the Rules which Rule, has been struck down by the Supreme Court in UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [2018 (3) TMI 357 - SUPREME COURT] as being ultra vires the provisions of Section 67 of the Act. Appeal allowed - decided in favor of appellant.
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