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of <h1>Tribunal excludes free supply items and bonuses from service tax assessment, upholding legal principles.</h1> <h3>AMR India Ltd. Versus Commissioner of Central Excise, Customs And Service Tax Hyderabad-II</h3> AMR India Ltd. Versus Commissioner of Central Excise, Customs And Service Tax Hyderabad-II - 2016 (42) S.T.R. 329 (Tri. - Bang.) Issues: Assessment of service tax on the value of free supply items and bonus received by the service provider.Analysis:1. Assessment of Service Tax on Free Supply Items:The appellant, a service provider, was providing site formation services to M/s Singareni under an agreement which included the supply of explosives and diesel oils by Singareni. The Revenue contended that the value of these free supplies should be added to the assessable value of services for service tax assessment. The Commissioner confirmed the demand of service tax, interest, and penalties. The main issue was whether the value of free supply items should be considered for service tax assessment. The Tribunal referred to a previous decision by the Larger Bench in the case of Bhayana Builders (P) Ltd and held that the cost of free supply items should not be added to the assessable value of services. The Tribunal also cited other cases to support this decision, emphasizing that the value of free supplies cannot be considered a charge for the services provided. Consequently, the Tribunal set aside the demand on this count, ruling in favor of the appellant.2. Assessment of Service Tax on Bonus Received:The second issue revolved around the bonus received by the appellant from Singareni for efficient use of explosives and diesel oil. The bonus was contingent on the quantity of explosives and oil used by the appellant. The Tribunal analyzed various precedents where incentives or bonuses given to service providers were not considered part of the value of services for service tax purposes. The Tribunal cited cases such as Kerala Publicity Bureau Vs CCE and Euro RSCG Advertising Ltd Vs CST Bangalore to support its decision. It concluded that the bonus received by the appellant was more akin to prize money for good performance and was not linked to the value of services provided. Therefore, the Tribunal found no justification for including the bonus in the value of services for service tax assessment. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant.In conclusion, the Tribunal ruled in favor of the appellant on both issues, holding that the value of free supply items and the bonus received should not be included in the assessable value of services for service tax assessment. The decision was based on established legal principles and precedents, ensuring a fair and just outcome for the appellant.
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