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TMI Blog2021 (6) TMI 920X X X X Extracts X X X X X X X X Extracts X X X X ..... ical error, hence the same may be rectified and their early hearing application may be disposed and appeal be heard finally. 4. Learned AR for the Revenue has no objection. 5. Considering the submissions advanced by the learned Advocate and on examination of the records, we find that the typographical mistake in the order deserves to be rectified. Consequently, Final Order No. A/85916-85918/2020 dated 26.11.2020 disposing the appeals under SABKA VISHWAS (LEGACY DISPUTE RESOLUTION) SCHEME, 2019 are recalled and the appeals are restored to its original number. 6. Learned Advocate for the appellant further submits that on the last date of hearing i.e. 26.11.2020 their early hearing applications were allowed and the appeals were fixed for hearing today. They requested that their appeals may be heard accordingly. Learned AR for the Revenue has no objection. Consequently, the appeals are taken up for hearing and disposal. 7. Learned Advocate for the appellant submits that the issue relates to demand of Service Tax on repair and maintenance services rendered by the appellant during the period of dispute. He submits that the issue have been dealt at length by this Tribunal for the earl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bour and services. Such deductions are stated by the Constitution Bench to be eight in number. What is important in particular is the deductions which are to be made under sub-paras (f), (g) and (h). Under each of these paras, a bifurcation has to be made by the charging Section itself so that the cost of establishment of the contractor is bifurcated into what is relatable to supply of labour and services. Similarly, all other expenses have also to be bifurcated insofar as they are relatable to supply of labour and services, and the same goes for the profit that is earned by the contractor. These deductions are ordinarily to be made from the contractor's accounts. However, if it is found that contractors have not maintained proper accounts, or their accounts are found to be not worthy of credence, it is left to the legislature to prescribe a formula on the basis of a fixed percentage of the value of the entire works contract as relatable to the labour and service element of it. This judgment, therefore, clearly and unmistakably holds that unless the splitting of an indivisible works contract is done taking into account the eight heads of deduction, the charge to tax that would be m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We have already seen that Rule 2(A) framed pursuant to this power has followed the second Gannon Dunkerley case in segregating the 'service' component of a works contract from the 'goods' component. It begins by working downwards from the gross amount charged for the entire works contract and minusing from it the value of the property in goods transferred in the execution of such works contract. This is done by adopting the value that is adopted for the purpose of payment of VAT. The rule goes on to say that the service component of the works contract is to include the eight elements laid down in the second Gannon Dunkerley case including apportionment of the cost of establishment, other expenses and profit earned by the service provider as is relatable only to supply of labour and services. And, where value is not determined having regard to the aforesaid parameters, (namely, in those cases where the books of account of the contractor are not looked into for any reason) by determining in different works contracts how much shall be the percentage of the total amount charged for the works contract, attributable to the service element in such contracts. It is this scheme and this s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue of 'consumables' supplied by the recipients to enable the appellants to fulfil their contractual obligation. In re Bhayana Builders (P) Ltd, the Hon'ble Supreme Court has held that '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 lead to the obvious 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' simply, because of the reason that no price is charged by the assessee/service provider from the service recipient in respect of such goods/materials. This further gets strengthened from the words 'for such service provided or to be provided' by the service provider/assessee. Again, obviously, in respect of the goods/materials supplied by the service recipient, no service is provided by the assessee/service provider. Explanation 3 to sub-section (1) of Section 67 removes any doubt by clarifying that the gross amount charged for the taxable service shall include the amount received towards the taxable service before, during or after provision of such service, implying thereby th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e gross amount 'charged' from any person by such commercial concern for providing the said taxable service'. According to these notifications, service tax is to be calculated on a value which is 33% of the gross amount that is charged from the service recipient. Obviously, no amount is charged (and it could not be) by the service provider in respect of goods or materials which are supplied by the service recipient. It also makes it clear that valuation of gross amount has a causal connection with the amount that is charged by the service provider as that becomes the element 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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