TMI Blog2016 (4) TMI 596X X X X Extracts X X X X X X X X Extracts X X X X ..... andated 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abatement of 67% permitted by notification no. 15/2004-ST dated 10 th September 2004 and thereafter by notification no. 1/2006-ST dated 1 st March 2006. 2. The proceedings against appellant were initiated on the ground that they were in receipt of material from M/s Raymonds Ltd and the value thereof should also have been included in the gross value before availing the abatement specified in the said exemption notifications. Allegedly, the computation of tax liability on the amount of ₹ 13,64,45,944/- received as payment from M/s Raymonds Ltd was not sufficient discharge of tax dues. 3. The impugned order has relied on notification no. 15/2004-ST dated 10 th September 2004 applicable to 'construction services' which becam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In his elaborate order, the adjudicating authority has also dwelt at length on the indispensability of the supplied materials for the rendering of 'commercial or industrial construction service' and asserts that the value of the free supplies cannot but be a part and parcel of the contract. The adjudicating authority further asserts that the inclusion is inevitable given that Rule 3(a) of Service Tax (Determination of Value) Rules, 2006 and section 67 of Finance Act, 1994 envisages that the value of taxable services shall be equivalent to the gross amount charged by the service-provider. Accordingly, he has held that the free supply is additional consideration received by the appellant and omission of this consideration in value o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecipient 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 fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provider for incorporation in the construction, which belong to the provider and for which the service recipient is charged towards the value of such supply/ provision / use and the corresponding value whereof was received by the service provider, to accrue to his benefit, whether independently specified as attributable to the specific material/ goods incorporated or otherwise, would alone constitute the gross amount charged., This is not to say that an exemption Notification cannot enjoin a condition that the value of free supplies must also go into the gross amount charged for valuation of the taxable service. If such intention is to be effectuated the phraseology must be specific and denuded of ambiguity. 16. In conclusion we ans ..... X X X X Extracts X X X X X X X X Extracts X X X X
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