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2019 (11) TMI 385

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..... t form part of the taxable value of service. The value of the free supplies of the explosives by the service recipient to the appellant is not includable in the taxable value - Appeal allowed - decided in favor of appellant. - Service Tax Appeal No. 51699 of 2015 - FINAL ORDER NO. 51430/2019 - Dated:- 7-11-2019 - HON BLE SHRI JUSTICE DILIP GUPTA, PRESIDENT AND HON BLE SHRI C.L. MAHAR, MEMBER (TECHNICAL) Ms. Amoha Sharma, Advocate - for the appellant. Shri G.R. Singh, Authorized Representative (DR) - for the Respondent. ORDER C.L. MAHAR :- The brief facts of the matter are that a show cause notice dated 28 August 2009 was issued to the appellant mentioning that it was engaged in providing taxable services namely site formation and clearance, excavation, earthmoving and demolition service and survey and exploration of mineral service which are taxable under sections 65 (97a) and 65 (104a) of Finance Act, 1994 the Act. The show cause notice makes a demand of service tax amounting to ₹ 29,85,126/- for the period from September 2004 to May 2007. The above-mentioned amount of the service tax demanded under Section 73 of the Act has been bifurcated. Service tax demand of ₹ 20, .....

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..... the Order-in-Original it is seen that the Adjudicating authority had mentioned that the respondent had received explosives free of cost from M/s J.K. White Cement during the period July 2005 to 2006-07 worth ₹ 9,66,504/- (₹ 4,88,952/- + ₹ 4,77,552/-) which he held to be not includible in value on the ground that the Assistant Commissioner, Central Excise Division, Ajmer had already decided that issue in earlier proceedings. However, rather than dropping the demand of service tax payable on this value calculated at the applicable rate, he dropped demand equivalent to the value itself i.e. ₹ 9,66,504/- obviously it was legally as well as factually incorrect and the departmental objection is well founded. Accordingly, the appeal on the ground is allowed and service tax leviable on the difference between ₹ 9,66,504/- and service tax leviable on the amount is to be recovered from the respondent alongwith interest in terms of Section 75 of the Act. Since the service tax leviable on this value i.e. ₹ 9,66,504/- has not been separately given in the show cause notice, the Deputy/Assistant Commissioner Division would calculate this as per the rate applica .....

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..... Representative has supported the findings given in the impugned order. 7. The only issue that needs to be decided is whether service tax confirmed by the Commissioner (Appeals) on the value of free supply of the explosives by J.K. White Cement to the appellant is includable in the assessable value of the taxable service or not in terms of the provisions of the Act. In this regard, we find that the issue at hand has already been decided by Supreme Court in Commissioner of Service Tax versus Bhayana Builders (P) Ltd. reported in 2018 (10) G.S.T.L. 118 (S.C.) wherein it has been held that for levy of the service tax as per the provision of Section 67 of the Act the gross amount charged by the service provider from the service recipient means the amount which is billed by the service provider on the service recipient in the invoice and, therefore, the free supplies provided by service recipient to the service provider cannot form part of the taxable value of service. The relevant extract of the above-mentioned judgment is reproduced below :- 13. A plain meaning of the expression the gross amount charged by the service provider for such service provided or to be provided by him would le .....

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..... the value of goods/materials supplied free is a form of payment and, therefore, should be added. We fail to understand the logic behind the aforesaid argument. A plain reading of Explanation (c) which makes the gross amount charges inclusive of certain other payments would make it clear that the purpose is to include other modes of payments, in whatever form received; be it through cheque, credit card, deduction from account etc. It is in that hue, the provisions mentions that any form of payment by issue of credit notes or debit notes and book adjustment is also to be included. Therefore, the words in any form of payment are by means of issue of credit notes or debit notes and book adjustment. With the supply of free goods/materials by the service recipient, no case is made out that any credit notes or debit notes were issued or any book adjustments were made. Likewise, the words, any amount credited or debited, as the case may be , to any account 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, th .....

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