TMI Blog2018 (7) TMI 1530X X X X Extracts X X X X X X X X Extracts X X X X ..... BER (TECHNICAL) Shri P. S. Reddy, Assistant Commissioner (AR) for the Appellant. None for the Respondent. [Order per: M.V. Ravindran] This appeal is filed by the Revenue against Order-in- Appeal No. 63/2009 (V-I) ST dated 23.06.2009. 2. Heard both sides and perused the records. 3. The lower authorities had issued the show cause notice to appellant, demanding the service tax under the category of Commercial or Industrial Construction Services on the ground that they had not included the value of free supply of material while arriving at the gross value charged for the services rendered and that the respondent is not eligible for abatement of Notification No. 01/2006 dated 01.03.2006. The Adjudicating Authority con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent despite notice. Since the issue is covered by the decision of the Hon ble Supreme Court in the case of Bhayana Builders Pvt. Ltd., and we take up the appeal for disposal. 6. On careful consideration of submissions made, we find that the First Appellate Authority has arrived at the correct conclusion as to set aside the Order-in-Appeal challenged before him. We find that the issue of inclusion of cost of free supply of goods in the gross value is decided by Larger Bench of Tribunal in the case of Bhayana Builders Pvt. Ltd., holding that cost of free supply of the goods should not be included for discharging the tax liability. Aggrieved by such an order, Revenue Authorities preferred civil appeals in the Apex Court and their Lor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be prescribed, however, it is subject to the provisions of sub-sections (1), (2) and (3). Moreover, no such manner is prescribed which includes the value of free goods/material supplied by the service recipient for determination of the gross value. 14. We may note at this stage that Explanation (c) to sub-section (4) was relied upon by the learned counsel for the Revenue to buttress the stand taken by the Revenue and we again reproduce the said Explanation herein below in order to understand the contention: (c) gross amount charges includes payment by (c) cheque, credit card, deduction from account and any form of payment by issue of credit notes or debit notes and [book adjustment, and any amount credited or debited, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether called suspense account or by any other name, in the books of accounts of a person liable to pay service tax would not include the value of the goods supplied free as no amount was credited or debited in any account. In fact, this last portion is related to the debit or credit of the account of an associate enterprise and, therefore, takes care of those amounts which are received by the associated enterprise for the services rendered by the service provider. 16. In fact, the definition of gross amount charged given in Explanation (c) to Section 67 only provides for the modes of the payment or book adjustments by which the consideration can be discharged by the service recipient to the service provider. It does not exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply of goods, the said notifications were issued for the convenience of the assessees. According to the Revenue, the purpose was to bifurcate the component of goods and services into 67% : 33% and to provide a ready formula for payment of service tax on 33% of the gross amount. It was submitted that this percentage of 33% attributing to service element was prescribed keeping in view that in the entire construction project, roughly 67% comprises the cost of material and 33% is the value of services. However, this figure of 67% was arrived at keeping in mind the totality of goods and materials that are used in a construction project. Therefore, it was incumbent upon the assessees to include the value of goods/material supplied free of cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of taxable service . Thirdly, even when the explanation was added vide notification dated March 1, 2005, it only explained that the gross amount charged shall include the value of goods and materials supplied or provided or used by the provider of construction service. Thus, though it took care of the value of goods and materials supplied by the service provider/assessee by including value of such goods and materials for the purpose of arriving at gross amount charged, it did not deal with any eventuality whereby value of goods and material supplied or provided by the service recipient were also to be included in arriving at gross amount gross amount charged . It can be seen from above reproduced relevant paragraphs from that the is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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