TMI Blog2019 (4) TMI 535X X X X Extracts X X X X X X X X Extracts X X X X ..... s noticed above, the issue required to be decided by the Commissioner stood answered in favour of the Appellant in the said decision - there is no hesitation in setting aside the finding recorded by the Commissioner that the value of goods supplied free of cost to the Appellant was required to be included in the gross value. Denial of benefit of Exemption Notification dated 01 March, 2006 - denial for the reason that the Appellant had availed the benefit of Cenvat Credit in relation to the work order relating to soil testing - Held that:- The proviso to the Exemption Notification dated 01 March, 2006 provides that the Notification shall not apply if the Cenvat Credit has been used for providing 'such taxable service'. The taxable service under consideration is 'Commercial or Industrial Construction Service'. The Cenvat Credit availed by the Appellant in regard to ‘Consulting Engineer Service’ cannot, therefore, be taken into consideration - The Appellant had not availed any input credit for the second works order relating to actual construction. It cannot be urged that the taxable service of ‘Consulting Engineer Service’ can be considered as a composite service with ‘Commercial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. It provides infrastructure related construction service to the telecom companies, which includes constructions of civil work and telephone towers. It has paid Service Tax on the said activities under the category of Commercial or Industrial Construction Service from 2006 to 2009 and from 2009 under Works Contract . 3. A show cause notice dated 12 March, 2012 was issued to the Appellant mentioning therein that Notification dated 01 March, 2006 exempts 'Commercial or Industrial Construction Service' from so much of Service Tax leviable thereon as in excess of the Service Tax calculated on a value which is equivalent to 33% of the gross amount charged by the Service Tax providers for providing the service, but the exemption is admissible only if the gross amount on which Service Tax has been paid, includes the cost of material supplied free by the service recipient for use in the construction. The notice mention that the work orders executed by the Appellant for different clients indicate that it had received free issued material for use in the construction, but this value was not included in the gross value declared by the Appellant in the Service Tax returns and, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 49 (Tri.-LB), which held that value of goods and materials supplied free of cost by a service recipient to a provider of taxable construction service would be outside the purview of taxable value or the gross amount charged. 5. The show cause notice came to be decided by the Commissioner by order dated 28 August, 2014. 6. As regards the issue of non-inclusion of value of free supplied material, the Commissioner observed : 19. ... After careful study of all the case laws cited by the party, I have come to the conclusion that the facts of the present case are not squarely covered by any of the said case laws. As the decisions cited are distinguishable on facts, in view of the Hon'ble Apex Court's ruling given by in the cases of Fiat India, Escorts Ltd. and Alnoori Tobacco Products (supra), there ration cannot be applied to the present case. 20. In view of the above, I find that the party has short-paid service tax by way of paying service tax on abated value instead of gross value. 7. As regards the denial of Exemption Notification dated 01 March, 2006, the Commissioner observed : 21. Further, it is noted that the second pre-requisite condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted an illegality in holding that the value of the goods supplied free of cost to the Appellant was required to be included in the gross value inasmuch as the issue stands decided in favour of the Appellant by a larger Bench of this Tribunal in Bhayana Builders (P) Ltd., which decision was placed before the Commissioner, but the Commissioner distinguished it only on the ground that the facts are different without even indicating how they were different. It has also been submitted that this decision of the larger Bench of the Tribunal was affirmed by the Supreme Court in Commissioner of Service Tax, Delhi vs Bhayana Builders (P) Ltd., reported in 2018-TIOL-66-SC-ST; (ii) The finding recorded by the Commissioner that the benefit of the Notification dated 01 March, 2006 would not be available to the Appellant because the Appellant had availed Cenvat Credit on input services for providing Consulting Engineer Services like concrete cube, safe bearing testing, soil investigation testing is incorrect inasmuch as the Appellant had availed the benefit of Cenvat Credit only in regard to Consulting Engineer Service and not in regard to Commercial Construction Service for which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruction service for providing such service and, therefore, shall necessarily not include the cost of free material. In support of his submission, he has placed reliance on the decision of the Supreme Court in Bhayana Builders (P) Ltd. The issue that fell for consideration before the Supreme Court was, whether the value of goods/material supplied or provided free of cost by a service recipient and used for providing the taxable service of construction or industrial complex is to be included in computation of gross amount for valuation of the taxable service under Section 67 of the Act. The Supreme Court observed that a plain reading of the expression 'the gross amount charged by the service provider for such service provided or to be provided by him' would lead to the conclusion that the value of goods/material that is provided by the service recipient free of charge is not to be included while arriving at the gross amount for the reason that no price is charged by the assessee/ service provider from the service recipient in respect of such goods/materials. 13. It needs to be noticed that the Appellant had placed the decision of the larger Bench of the Tribunal in Bh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... works order relating to construction which would be under the category of Commercial Construction Service . According to the Appellant, these are two separate activities falling under separate category of services, namely, 'Consulting Engineer Service' and Construction Service and cannot be clubbed together for the purpose of the Exemption Notification. In this connection, learned counsel placed reliance on the proviso to the Notification dated 01 March, 2006, wherein it has been stated that the Notification shall not apply in cases where 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. It is his submission that such taxable service would be the service under consideration and not any other service. In this connection, learned counsel for the Appellant also pointed out that soil testing has necessarily to be done prior to the actual construction to find out whether it would be feasible to construct on that particular area or not and no useful purpose would be served by having a composite contract bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecuted; one for soil testing and the other for construction of tower. For the first service rendered by the Appellant Service Tax had been paid as 'Consulting Engineer Service' and input credit had been availed. The Appellant had not availed any input credit for the second works order relating to actual construction. It cannot be urged that the taxable service of Consulting Engineer Service can be considered as a composite service with Commercial Construction Service since it has an essential character of construction. What also needs to be remembered is that the proviso to the Exemption Notification dated 01 March, 2006 provides that the Notification shall not apply if the Cenvat Credit has been used for providing 'such taxable service'. The taxable service under consideration is 'Commercial or Industrial Construction Service'. The Cenvat Credit availed by the Appellant in regard to Consulting Engineer Service cannot, therefore, be taken into consideration. 20 The finding recorded by the Commissioner in this regard is, therefore, set aside and the benefit of Exemption Notification dated 01 March, 2006 cannot be denied to the Appellant for this re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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