TMI Blog2011 (3) TMI 183X X X X Extracts X X X X X X X X Extracts X X X X ..... N, JJ. ORDER Per: P. Karthikeyan : These are applications filed by M/s VPR Mining Infrastructure Pvt. Ltd. seeking waiver of pre-deposit and stay of recovery of the dues confirmed against them. 2. The appellants, M/s VPR Mining Infrastructure Pvt. Ltd. (VPR for short) are engaged in providing services under the category "site formation, clearance and excavation" and are registered with the Service Tax department. Adjudicating allegations of short payment of service tax due, the Commissioner of Customs, Central Excise and Service Tax, Hyderabad confirmed the following dues against VPR: Stay/Appeal No. Order-in-Original No. date Period of dispute Service Tax (Rs.) Interest Penalty St/408/10 ST/731/10 53/2009 ST, dated 21.12.09 16.6.05 to 31.3.08 13,12,26,103 Interest u/s 75 Penalty @ 2% per month u/s 76; Penalty of Rs.1000 u/s 77; and penalty of Rs.13,13,00,000 u/s 78 St/1063/10 ST 1798/10 27/2010-ST, dated 4.5.2010 Apr 08 to Jun 09 22,71,78,522 Interest u/s 75 Penalty @ 2% per month u/s 76 and penalty of Rs.5,000 u/s 77 The demands are raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith Service Tax (Determination of Value) Rules, 2006 (STR for short) envisaged 'consideration received'. As per Rule 3 of STR, where the consideration received was not wholly or partially consisting of money, money value of taxable service shall be determined as prescribed. 'Consideration' meant something in return i.e. quid pro quo . As the free supply of diesel and explosives was consumed in provision of the subject service, the same could not be equated with consideration. The person who received the consideration should benefit from the same. The applicant relied on the decision of the Hon'ble High Court or Madras in the case of Larsen Toubro Ltd. v. Union of India [2007 (7) S.T.R. 123] and decision of the Hon'ble High Court of Delhi in the case of Era Infra Engineering Ltd. v. Union of India [2008 (11) STR 3] in support of the plea that value of materials received from the recipient of service was not includible in the taxable value of the service. The appellant had not received anything other than money. 3.2 Section 67 of the Act was substituted with effect from 18.4.2006 and read as follows: "67(1) Subject to the provisions of this Chapter, where service tax is chargea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the contract. The appellant had paid tax of Rs. 92,98,858 towards bonus and had furnished ST-3 return for the half year October 2008 to March 2009. 3.4 As the assessee had taken part in the process initiated by SCCL, inviting tenders for contract for services, the appellant was not aware of the price of materials supplied by SCCL. Therefore there was no suppression by the assessee justifying invocation of longer period, The Commissioner had wrongly invoked larger period in raising the demand and erroneously imposed penalties on the appellant. 4. During hearing, the grounds taken in the appeal were reiterated. The learned Counsel for the appellants relied on the Stay Order in the case of M/s Gulf Oil Corporation Ltd. v. CST, Hyderabad reported in wherein this Tribunal had waived pre-deposit of an amount of Rs. 5.13 crores being the service tax demanded from the appellants towards value of diesel and explosives received free of cost in rendering site formation, clearance and excavation service. Another decision relied on is a Stay Order in the case of Karamjit Singh Co. v. Commissioner of Central Excise, Raipur [2009 (15) STR 266 (Tri.-Del.)] where, in a similar case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xable value of photography service, the Tribunal held that gross amount charged by service provider included value of labour and skill and cost of inputs and input services where service was the dominant object of the contract. Value of all materials and goods used or consumed for providing service was includible in the value for assessment. (iv) Simplex Infrastructure Ltd. v. Commissioner of Service Tax, Kolkata [2011 (21) STR 11 (Cal.)]. In this judgment, the High Court had held that on mere finding of prima facie case, the Tribunal could not grant unconditional injunction restraining collection of revenue without making adequate protection for realization of such revenue if challenge by petitioner failed. 6. We have carefully considered the applications, other case records and submissions made by both sides. The issue to be decided is whether the taxable value of the services 'site formation, clearance and excavation' rendered by the applicants includes the value of diesel, explosives, etc. supplied by its client, SCCL for rendering the service under contract. Revenue relies on the statutory provisions contained in section 67 of the Finance Act, 1994 (the Act), the Service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to decide the applications: (a) Section 67 of the Finance Act:- "67. Valuation of taxable services for charging service tax.- (1) Subject to the provisions of this Chapter, where service tax is chargeable on any taxable service with reference to its value, then such value shall, (i) in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him; (ii) in a case where the provision of service is for a consideration not wholly or partly consisting of money, be such amount in money as, with the addition of service tax charged, is equivalent to the consideration; (iii) in a case where the provision of service is for a consideration which is not ascertainable, be the amount as may be determined in the prescribed manner. (2) Where the gross amount charged by a service provider, for the service provided or to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged. (3) The gross amount charged for the taxable service shall include an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , subject to condition that there is documentary proof specifically indicating the value of the said goods and materials. This Notification shall come into force on the 1st day of 2, July, 2003." (d) Notification No. 15/2004 dated 10.9.2004:- "Service tax - Effective rate of duty for construction service In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service provided by a commercial concern to any person, in relation to construction service, from so much of the service tax leviable thereon under section 66 of the said Act, as is in excess of the service tax calculated on a value which is equivalent to thirty three per cent of the gross amount charged from any person by such commercial concern for providing the said taxable service: Provided that this exemption shall not apply in such cases where - (i) the credit of duty paid on inputs or capital goods has been taken under the provisions of the Cenvat Credit Rules, 2004; or (ii) the commercial concern has availed the benefit under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elation to residential complex, referred to in sub-clause ( b ) of clause (30a) of section 65 of the Finance Act. Explanation .- The grass amount charged shall include the value of goods and materials supplied or provided or used for providing the taxable service by the service provider. Provided that this notification shall not apply in cases where,- (i) the CENVAT credit of duty on inputs or capital goods or the CENVAT credit of service tax on input services, used for providing such taxable service, has been taken under the provisions of the CENVAT Credit Rules, 2004; or (ii) the service provider has availed the benefit under the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 12/2003-Service Tax, dated the 20th June, 2003 [G.S.R. 503 (E), dated the 20th June, 2003]. Explanation. - For the purposes of this notification, the expression "food" means a substantial and satisfying meal and the expression "catering service" shall be construed accordingly." 7.1 Section 67 of the Act contains provisions relating to valuation of taxable service for charging service tax. As per clause (i) of sub-section 1 of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value-of the materials used in rendering the taxable service and charge the same from the client. The assessee cannot exclude the value of these in computing the taxable value. This is obvious from Rule 3 (a) of the STR which provides that value of taxable service in a case where part of the consideration received is not consisting of money, the taxable value of such taxable service shall be equivalent to the gross amount charged by the service provider to provide similar service to a person in the ordinary course of trading and the gross amount charged is the sole consideration. 7.2 In the Jaihind Projects Ltd. case (supra), the Tribunal considered a case where the taxable value of laying of pipes classified under 'Commercial or Industrial Construction Service' was in dispute. The assessee had received pipes free of cost from the service recipient and had contend that the cost of the same was not includible in the assessable value. Rejecting the above contention, the Tribunal held that the assessee's case was inconsistent with the provisions of section 67 of the Act and the STR. The Tribunal observed as follows: "23. The appellants have relied upon section 66 and section 67 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which are non-monetary in nature, are also required to be taken into account. Rule 3 of Service tax (Determination of Value) Rules, 2006 reads as under: Rule 3: Manner of determination of value. Subject to the provisions of section 67, the value of taxable service, where the consideration received is not wholly or partly consisting of money, shall be determined by the service provider in the following manner: (a) the value of such taxable service shall be equivalent to the gross amount charged by the service provider for similar service to any other person in the ordinary course of trade and the gross amount charged is the sole consideration. (b) where the value cannot be determined in accordance with the Clause (a), the service provider shall determine the equivalent money value of such consideration which shall, in no case be less than the cost of provision of such taxable service. 24. In this case, in our opinion, Rule 3 squarely applies to the present case and supply of pipes by the receiver which is an essential component and is essentially required for providing pipeline laying service, has to be treated as consideration other than in the form of money and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interim orders of the High Court in Larson Tubro Ltd. case (supra) and Era Infra Engineering Ltd. case (supra): "19. As regards the decision of the learned Single Judge of the Madras High Court in the case of Larsen Toubro Ltd. v. Union of India reported in 2007 (7) STR 123 (Madras) relied upon by Dr. Pal, we find that by an order consisting of two paragraphs, the learned Single Judge after recording prima facie case of the petitioner granted an ad interim order of injunction without considering the question of balance of convenience and inconvenience. We are of the view that in a revenue matter, when a particular provision has been challenged as ultra vires the provision of the Constitution, the Court, on mere finding of prima facie case, should not grant unconditional injunction restraining the government from collecting revenue on the basis of such provision impugned without making adequate protection of realization of the same in the event the challenge fails by putting the petitioner on terms. In the other decision of the Division Bench of the Delhi High Court in the case of Era Infra Engineering Ltd. v. Union of India reported in 2008 (11) STR 3 (Del.) relied upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E., Bangalore, reported in 2006 (2) S.T.R. (Tri.-Bang.) were contrary to the above conclusion reached by the Bench and referred the dispute whether value of the materials such as paper and chemicals consumed in rendering photography service was excludible from the taxable value, to a Larger Bench. The Tribunal also found that the judgment of the Apex Court dismissing the Civil Appeal filed by the Revenue challenging the decision of the Tribunal in Shilpa Colour Lab case (supra) did not constitute a binding precedent. The Tribunal relied on the decision of the Apex court in Everest Copiers v. State of Tamilnadu reported in (1996) 103 STC 360 (SC) to hold that the photography service was rendered as per a service contract between the parties. The dominant intention of the contract was to render service and not sale of the goods. 8.1 We also note that disposing a petition filed by the Asst. Commissioner of Central Excise, Calicut impugning Final Order No. 14/2007, dated 30.10.2006 of this Bench in the case of Surabhi Colour Lab [2007] (5) STR 423 (Tri.-Bang.), the Apex Court remanded the dispute to the Tribunal with the following observations : "In the case of Adlabs v. C.C.E., Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirming demand on bonus amount of Rs. 2,73,35,171 received during April 2009 to September 2009. Commissioner held that these claims were not substantiated before him. We note that merits of these submissions need to be examined. 10. The learned Jt. CDR produced a copy of the judgment of Hon'ble High Court of Andhra Pradesh in the case of CCE, Guntur v. Sri Chaitanya Educational Committee wherein after considering several judgments of the Apex Court on the manner of deciding application for waiver of pre-deposit under section 35F of the Central Excise Act and under section 129E of the Customs Act, their lordships laid down the following principles to govern disposal of the stay application by the Tribunal: "13. From the judicial decisions analysed as above, the following principles would emerge which have to be kept in mind while considering the applications for stay or for dispensing with the requirement of pre-deposit under section 35F of the Central Excise Act, or under section 129E of the Customs Act, or other similar provisions. (1) The applications for stay should not be disposed of in a routine manner unmindful of the consequences flowing from the order requiring ..... X X X X Extracts X X X X X X X X Extracts X X X X
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