TMI Blog2018 (11) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... to consideration and where the provision of service is for consideration which is not ascertainable, be the amount as may be determined in the prescribed manner. Thus, after the amendment in Section 67 of the Act the explanation thereof purports to define the expressions “consideration” “money” and “gross amount charged”. Such material provided by the service recipient is to be used for service recipient only. Hence no benefit has accrued to the service provider due to the said free construction material. Therefore, we are of the opinion that the said construction material would not constitute a non-monetary consideration - Thus, gross amount charged shall include the construction material if and only if some value is charged for the same. Hence, the construction material supplied by the service recipient free of cost, the amount thereof is not the gross amount taxable value as not being charged. However, for the construction material (may be minor) as used by the service provider i.e. the appellant he is liable to take the benefit of this Notification. The adjudicating authority has committed an error while interpreting the provisions qua valuation of the taxable service and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntioned therein. Thus, the Department vide show cause notice No. 4353 dated 12.04.2010 alleging a short payment of Service Tax by the appellant has proposed the demand of ₹ 68,71,070/- for the period w.e.f. 01.10.2004 to 31.03.2006 alongwith interest at the appropriate rate and the proportionate penalty under Section 76, 77 78 of the Finance Act. The said demand was confirmed by the order under challenge. Resultantly, the present appeal. 2. We have heard Shri Rishabh Khandelwal, ld. CA for the appellant and Mr. Amresh Jain, ld. D.R. for the Department. 3. It is submitted on behalf of the appellant that the order under challenge has been announced in sheer violation of the law settled in this respect as in the case of Bhayana Builders vs. CST, Delhi 2013 TIOL 133 CESTAT Delhi L.B. Hence is liable to be set aside on this sole ground. It is also mentioned that the Department has erred in holding that Notification No. 15/2004 or Notification No.1/2006 is not applicable as the cost of material supplied by the service provider is not included. The said finding is also not sustainable. The decision of Jaihind Project Ltd. Vs. CST, Ahmadabad 2010 (18) STR 650 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue of taxable service such as; 7.2 An initial deposit made by the subscriber while applying for telephone a connection; or pager or facsimile; the cost of unexposed photography film or unrecorded magnetic tape; the cost of parts or accessories or consumables such as lubricants and coolants, if any sold to the customer during the course of service or repair of motor cars; air fare or rail fare connected by an air/rail the travel agent in respect of service provided; the cost of parts or other materials, if any sold to the customer during the course of providing maintenance or repair services, etc. 8. After the amendment, Section 67 of the Act says that where the service tax is chargeable on any taxable service with reference to its value, then such value shall in a case when the provision of service is for consideration in money be the gross-amount charged by the service provider for such service. (as is mentioned in sub-clause (i) thereof). However, as per sub-clause (ii) thereof where provision of service is for a consideration not wholly or partly consisting of money, the value shall be such amount in money as with addition to service tax charged is equivalent to consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as is in excess of the Service Tax calculated on a value which is equivalent to 33% of the gross-amount charged from any person by such commercial concern for providing the said taxable service. The Notifications No.15/2004-ST dated 10.09.2004 reads as follows:- 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 the notification of the Government of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n addition, the material used by the provider, by discharging his tax liability he is entitled to the abatement as mentioned in the Notifications herein. 14. The larger Bench of this Tribunal in Bayana Builders (supra) has already held that in Jai Hind Projects Ltd. vs. CST, Ahmadabad 2010 (18).. STR 650.. the Tribunal had proceeded on flawed interpretation of the provision of Section 27 while holding as follows:- Basically, the objective of the explanation is to bring parity among all the service providers providing such services. Let us take a case of two pipe laying service providers. In one case, the pipes are provided by the service receiver free of cost and in such case, the service receiver leaves it to the provider to supply the pipes or sell the pipes to him. In latter case, the value of the services would include the value of the pipes. In the former case, the value of the pipes gets excluded just because of the service receiver has provided the same free............. The objective of the explanation and the proviso is to ensure that in different situations, the liability of Service tax would remain the same and it is very difficult to find fault with this ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken into account is the consideration for transfer of property in goods from the seller to the buyer. For this purpose, tax is to be levied on the agreed consideration for transfer of property in the goods and in such a case cost of manufacture is irrelevant. As compared to the sales-tax law, the scheme of levy of excise duty is totally different. For excise duty purposes, transfer of property in goods or ownership is irrelevant. As stated, excise duty is a duty on manufacture. The provisions relating to measure (Section 4 of 1944 Act read with Excise Valuation Rules, 2000) aim at taking into consideration all items of costs of manufacture and all expenses which lead to value addition to be taken into account and for that purpose Rule 6 makes a deeming provision by providing for notional additions. Such deeming fictions and notional additions in excise law are totally irrelevant for sales-tax purposes. 16. In view of entire above discussion, we are of the opinion that adjudicating authority has committed an error while interpreting the provisions qua valuation of the taxable service and has also committed an error while ignoring the settled principle of law rather has reli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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