Order date: 27 September 2022

Facts

• The appellant, M/s. Dhrubashish Biswas, is engaged in the works contract/repair and maintenance contract and work has been done for Public Sector Undertakings like Bharat Sanchar Nigam Ltd. (BSNL), Life Insurance Corporation of India (LIC), etc. For the financial years 2014-2015.
• The appellant had filed return for 2014-15 and availed abatement for the material component permissible under Rule 2A of Service tax Rules 2006. Further, there was amendment made from time to time. 
• The appellant had availed abatement for the material component as permissible under Rule 2 A of Service Tax (Determination of Value) Rules, 2006, wherein it is provided that with respect to original work, the taxable value under Service Tax is 40% of the gross amount charged. Whereas for repair and maintenance works, or re-conditioning or restoring, the taxable value is 70% of the gross amount.
• A show-cause notice was issued alleging that the appellant has received gross amount of Rs.56,46,859/- as per Form 26 AS. Thereafter, Revenue vide letter dated 24.10.2018 called for copy of the records like balance sheet, profit & loss account, Income Tax Return, details of service provided , copy of the bank statement, copy of the ST-3 Return etc.
• Being failed by the appellant to submit the details called for, the revenue rejected the abatement and demanded service tax along with interest, penalty and late fee. 

Issue 

• Whether tax has been rightly demanded with respect to the abated portion of turnover or incorrect calculation along with penalty. 

Order 

• The Tribunal observed from the documents submitted that it is evident that the nature of work includes use/supply of materials. Further, rejection of the claim of abatement for material component by the court below is against Valuation Rules and facts on record. I further find that the appellant had provided calculation of their admitted tax at Rs.2,24,763/-, which has been taken notice of, in para 12 of the impugned order-in-appeal. However, calculation has been rejected on flimsy ground.
• Further, liability to pay tax has been correctly calculated as per notification no.30/2012-ST, under which the appellant is required to pay only 50% of the service tax liability  and the balance 50% is payable  by the recipient of the service being  Corporate entity.
• It found that rejection of the claim of abatement for material component is against Valuation Rules and facts on record. 
• The appeal was allowed.