Service Tax
TRT-2025-
Cestat Chennai
Date:-07-03-23
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 07 March 2023
Parties: M/s. Indiana Minerals Vs Commissioner of Central Excise (Appeals)
Facts –
- The Appellant, M/s. Indiana Minerals, had constructed 11 culverts at the premises of India Cements Limited and paid service tax for the work on 33% of the value and claimed 67% abatement.
- A Show Cause Notice dated 15.09.2011 was issued to the appellant alleging that as the appellant has received free supply of materials, they are not eligible to claim abatement under Notification No. 1/2006-ST.
Issue –
- Whether the appellant has to include the value of the free supplies in the taxable value for discharge of service tax so as to deny the benefit of abatement?
Order –
- The Tribunal held that the issue is no longer res integra and decided by the Hon’ble Apex Court in the case of M/s. Bhayana Builders (P) Ltd. wherein it was held that any amount charged which has no nexus with the taxable service and is not a consideration for the service provided does not become part of the value which is taxable under Section 67.
- It was also held that according to Notification No. 1/2006-ST., service tax is to be calculated on a value which is 33% of the gross amount that is charged from 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‟.
- Following the ratio of the said decision the demand cannot sustain and the impugned order is set aside.
- The appeal is allowed.
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