Service tax valuation excludes free telecom vouchers issued as commission when no amount is actually charged or received.

Free recharge vouchers and SIM cards issued to dealers as commission were not includible in the taxable value for service tax because valuation under the then-applicable provisions was confined to the gross amount actually charged for the taxable service. Tax had already been discharged on amounts received from distributors or dealers for the SIM cards, and no amount was received for the free vouchers. A later clarification on telecommunication services could not be applied to the earlier period, and the prior decision of the same Bench on similar facts supported the exclusion. The valuation demand was therefore unsustainable, and service tax was payable only on the amount actually charged and received.

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Issues: Whether the free issue of recharge vouchers / SIM cards to dealers as commission formed part of the taxable value for service tax under the valuation provisions.

Analysis: The taxable value under the service tax regime was the gross amount charged by the service provider for the service rendered. On the facts, tax had already been discharged on the amount actually received from distributors or dealers for the SIM cards, while the free recharge vouchers were issued as commission and no amount was received for them from the dealers. The valuation provisions then in force did not expressly include such free distribution in the assessable value, and the later clarification regarding telecommunication services could not govern the earlier period in dispute. The issue was covered by the prior decision of the same Bench on materially similar facts.

Conclusion: The free recharge vouchers / SIM cards were not includible in the taxable value, and the demand was unsustainable. The appeal succeeded in favour of the assessee.

Final Conclusion: The valuation demand relating to free issue of telecom vouchers was set aside, and service tax was held payable only on the amount actually charged and received for the service.

Ratio Decidendi: For service tax valuation, only the gross amount actually charged for the taxable service can be included, and amounts not received by the service provider but issued free as commission are not part of the taxable value unless the governing provision expressly so provides.

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