Service tax valuation and abatement require fresh factual scrutiny where free supplied materials are included in taxable value.

Service tax valuation for commercial or industrial construction and residential complex services could not be confirmed without independently examining whether the value of free supplied materials was includible and whether abatement under Notification No. 15/2004-ST remained available. The record showed that the taxable value and residual demand had not been properly recalculated on a clear factual basis. The matter was therefore remanded for fresh adjudication after natural justice, with all valuation and abatement issues left open and no final finding on merits.

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Issues: Whether the value of free supplied materials was required to be included in the taxable value for commercial or industrial construction and construction of residential complexes, and whether the appellant was entitled to the benefit of the abatement notification while recalculating the service tax demand.

Analysis: The demand arose from inclusion of the value of free materials in the gross value of the services rendered. The adjudicating authority had not examined whether the appellant could still claim the abatement under Notification No. 15/2004-ST after such inclusion. The record also showed confusion in the manner in which the taxable value had been computed for the remaining demands. The matter therefore required fresh factual examination and recalculation in light of the applicable notifications and judicial decisions, with all issues kept open and without a finding on merits.

Conclusion: The valuation and abatement questions were not finally determined and were sent back to the adjudicating authority for reconsideration after following natural justice.

Final Conclusion: The appeal succeeded to the extent of obtaining a remand for fresh adjudication, and the disputed tax computation was left open for reconsideration.

Ratio Decidendi: Where taxable value is computed by including free supplied materials, the adjudicating authority must independently examine entitlement to statutory abatement and recalculate the demand on a proper factual basis before confirming service tax liability.

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