TMI Blog2021 (7) TMI 854X X X X Extracts X X X X X X X X Extracts X X X X ..... side. Hence, the respondent is only required to pay the differential duty of ₹ 1,53,100/-. Further, penalty under Section 78 is also set aside, there being no case of falsification or contumacious conduct, in the facts and circumstances on the part of the respondent/assessee. The late fee of ₹ 20,000/- under Rule 7C is reduced to ₹ 10,000/-. The appeal of Revenue is dismissed. - Service Tax Appeal No.52255 of 2016 With Service Tax Cross No.51556 of 2016 - FINAL ORDER NO.51664/2021 - Dated:- 6-7-2021 - SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) Shri Pradeep Gupta, Authorised Representative for the appellant. Shri Yash Dhadda, Chartered Accountant for the respondent. ORDER Revenue is in appeal against the order-in-original dated 30.03.2016 passed by the Commissioner accepting the VCES declaration filed by the respondent/assessee on 30.12.2013 and further, confirming demand of service tax of ₹ 1,53,100/- along with interest and imposing an equal amount of penalty under Section 78. It has been further ordered to pay interest on the tax amount relating to free of cost material supplied to the respondent/assessee by the Principal, in execut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information from a third party source, informing that the respondent has received an amount of ₹ 11,17,79,859 during the financial year 2012-2013 for providing taxable services, for which clarification was sought. Further, Revenue also wanted to clarify the claim of abatement and availment of Composition Scheme. The respondent has discharged their service tax liability under VCES after availing Composition Scheme applicable to works contract. The Revenue further in reference to Profit Loss Account filed by the respondent with Income Tax Return for the period 2008-2009 to 2012-2013, calculated the service tax dues at ₹ 2,75,13,319/- as follows:- Table Sl.No. Period Gross Receipt Rate of Service Tax S.T. Payable Ed.Cess Higher Ed.Cess Total S.T. payable 1. 2008-09 9503664 ST @12%+(EC2%+SHEC1%) of ST 1140440 22809 11404 1174653 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xable turnover and have paid the service tax under the Composition Scheme. The respondent further contended that there is no case of non-compliance on their part, and they have made available the details of their financial accounts i.e. Form AS-26, relevant work orders to the Department. It was contended that the respondent was entitled to either claim abatement for the material components or pay tax on the gross amount under the Composition Scheme, on the taxable turnover. Accordingly, they have rightly calculated and paid the tax, and there is no error in their declaration under VCES. It was also contended that they maintained regular books of accounts in the normal course of business, which are audited by the Chartered Accountant under the Companies Act as well as Income Tax Act, etc. They also contended that that the materials supplied free of cost by the principal for use in the works contract is liable to tax and not liable to be included in the gross turnover, as held by the Larger Bench of this Tribunal in the case of Bhayana Builders Pvt. Ltd. 2013 (32) STR 49 (Tribunal-LB), which has been affirmed by the higher court. Accordingly, following the said decision, the resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ials received free of cost in the taxable turnover. It was declared in the ST-3 Returns. However, due to calculation error, short payment was worked out to ₹ 3,344/- only. 8. During 2009-2010, the service tax payable was worked out to ₹ 9,27,409/- whereas as per Return, the respondent has paid tax of ₹ 7,93,874/-. Thus, the short payment worked out at ₹ 1,33,535/-. It was found that the respondent has received free of cost materials for ₹ 6,46,960/-, which is also to be taken into consideration for charging service tax. Further, it is observed that as regards the free of cost materials, the same has been considered by the respondent/assessee in the declaration filed for the year 2011-2012, and the said amount is not includible again and accordingly, the tax liability declared in the declaration is ₹ 5,18,200/- whereas the correct tax liability was worked out to ₹ 5,34,421/-, hence, the tax short paid was ₹ 16,221/- only. For the Period 2011-2012 9. It is found that any additional service tax is required to be recovered, in respect of free of cost supplied materials for ₹ 74,96,779/-, the assessee was liable to pay s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n holding that the declaration under VCES was not substantially false and further urged that, agreeing with the short paid service tax as calculated by the ld. Commissioner at ₹ 1,53,100/-, it is contended that the declaration is substantially false under VCES, which is to be rejected. Further, the respondent was required to declare the free of cost supplied materials, which was only declared later on by them. As such, the respondent has short declared the service tax liability of ₹ 6 lakhs (approx.). 14. The respondent has also filed cross objections, which have been registered and are considered. The respondent/assessee has given bifurcation of demand as per order-in-original, which is as follows:- Table Year Amount of Service Tax Remarks 2008-2009 to 2010-11 ₹ 153,100/- Amount confirmed in OIO passed by Commr. 2012-13 ₹ 3,69,498/- Alleged service tax on free supplies of materials by service recipient 2013-14 ₹ 1,09,846/- ..... 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