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TMI Blog2023 (10) TMI 1164X X X X Extracts X X X X X X X X Extracts X X X X ..... and commercial or industrial construction service. The Appellant entered into a contract dated 12.12.2007, with M/s Kolkata West International City( Herein after referred as KWIC) for construction of new residential complex and civil structures at the Kolkata West International City (phase I). As per the contract KWIC supplied materials such as cement, TMT bars etc free of cost to the Appellant. The Appellant has not added the cost of free supply materials received from M/s KWIC in the assessable value for the purpose of payment of service tax. Accordingly, as investigation was initiated by DGCEI and a Notice dated 15.02.2010 was issued to the Appellant demanding service tax of Rs.53,31,470/-along with interest and penalty. The said Notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Circular No. DOE No.334/13/2009-TRU dt.6.7.09, issued by the Board wherein it has been clarified that the value of the free supply materials supplied by the recipient of the service shall be included with the gross amount charged by the provider of service. The appellant contended that the said Circular was issued only on 7.7.09 and therefore, the same cannot have the retrospective effect. They stated that the Ld. Commissioner did not consider the submissions of the appellant that the value of the free supply materials were not includable during the relevant period and also circulars/notifications cannot have retrospective effect in respect of the said issue. Accordingly, they contended that the order passed by the Ld. Commissioner canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Vs Bhayana Bulders (P) Ltd, reported in 2018 (010) GSTL 0118 S.C, wherein it has been held that value of goods/materials supplied free of cost by the recipient used for providing taxable service are not includable in the assessable value for the purpose of payment of service tax. The relevant portion of the order is reproduced below. 16. " In fact, the definition of "gross amount charged" given in Explanation (c) to Section 67 only provides for the modes of the payment or book adjustments by which the consideration can be discharged by the service recipient to the service provider. It does not expend the meaning of the term "gross amount charged" to enable the Department to ignore the contract value or the amount actually charged by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the Assesses. According to the Revenue, the purpose was to bifurcate the component of goods and services into 67% 33% and to provide a ready for formula for payment of service tax on 33% of the gross amount. It was submitted that this percentage of 33% attributing to service element was prescribed keeping in view that the entire construction project, roughly 67% comprising the cost of material and 33% is the value of services. However, this figure of 67% was arrived at keeping in mind the totality of goods and materials that are used in a construction project, roughly 67% comprises the cost of material and 33% is the value of services. However, this figure of 67% was arrived at keeping at keeping in mind the totality of goods and mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 01, 2005, it only explained that the gross amount charged shall include the value of goods an materials supplied or provided or used by the provider of construction service. Thus, though it took care of the value of goods and materials for the purpose of arriving at gross aount 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 cincluded in arriving at gross amount 'gross amount charged'. 19. Matter can be looked into f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment is empowered to grant exemption from the levy of service tax either wholly or partially, whih is leviable on any 'txable service' defined in any of sub-clauses of Clause (105) of Section 65. Thus, exemption Under Section 93 can only be granted in respect of those activities which the Parliaent is competent to levy service tax and covered by Sub-clause (zzq) of Clause (105) and Sub-clause (zzzh) of Clause (105) of Section 65 of Chapter V of the Act under which such notifications were issued. 21. For the aforesaid reasons, we find ourselves in agreement with the view taken by the Full Bench of CESTAT in the impugned judgment dated September 6, 2013 and dismiss these appeals of the Revenue. 22. Insofar as Civil Appeal No. 3247 of 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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