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Jaiswal Builders And Contractors Versus Commissioner of Central Excise, Nagpur

2016 (4) TMI 596 - CESTAT MUMBAI

Demand 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 matte .....

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f 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. .....

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(J) And C J Mathew, Member (T) For the Appellant : Shri A K Prabhakar, Adv For the Respondent : Shri R K Das, Deputy Commissioner (AR) ORDER Per C J Mathew M/s Jaiswal Builders & Contractors is in appeal before us against Order-in-Original No: 06/2009/ST/C dated 30 th October 2009 passed by the Commissioner of Central Excise & Customs, Nagpur in which differential tax of ₹ 1,08,64,788/- inclusive of cess has been confirmed for rendering 'commercial or industrial construction se .....

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ings 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 1 .....

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that computation of the 'gross amount charged' included 'the value of goods and materials supplied or provided or used by the provider of the construction service for providing such service.' 4. While the said explanation continued to find a place in the successor notification of 2006, the impugned order has extended its applicability to the period prior to 1 st March 2005 by reference to the ratio of the decision of the Hon'ble High Court of Rajasthan in Shree Cements Ltd v .....

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r notification no. 1/2006 dated 1 st March 2006) was contrary to law. 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 .....

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argument that additional consideration cannot escape the tax net, the impugned order refers to and cites liberally a catena of judicial pronouncements, viz., Free India Dry Accumulators Limited v Union of India [1999 (107) ELT 290 (SC)], Ubique Metamed Pvt Ltd. vs Commissioner of Central Excise, Bolpur [2006(199) ELT 514 (Tri-Kolkatta)], Commissioner of Central Excise,Mumbai - III, v Uniabex Alloy Products Ltd [2009(236) ELT 520 (Tri-Mumbai)], Motherson Sumi Systems Ltd v Commissioner of Centra .....

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2 (60) ELT 671 (SC)] and Motherson Sumi Systems Ltd v Commissioner of Central Excise, Meerut [2002 (147) ELT 1121 (Tri-Del)]. 8. 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 .....

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re 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. 9. Juxtaposition with a scenario in which service-provider undertakes to procure .....

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culation of a specific exclusion is not a ground to blind oneself to the legal constraints on inclusion of amounts in 'gross amount' of consideration. 10. We find that the issue is squarely covered by the decision of this Tribunal in Bhayana Builders (P) Ltd v. Commissioner of Service Tax, Delhi [2013 (32) STTR 49 (Tri-LB)] in which that specific question was decided as follows: "15. From the several aids to interpretation, referred to (supra) we are compelled to conclude that goods .....

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