2017 (3) TMI 1461 - AT - Service Tax

Service tax appeal allowed on exclusion of free supplied goods from taxable value

The appeal against the order-in-appeal regarding service tax on the erection, commissioning, and installation of electricity transmission towers was ... Valuation - erection, commissioning & installation of the electricity transmission towers being supplied by the electricity recipient - whether the cost of the tower supplied by the Electricity Board is required to be added in the assessable value? - Notification No. 15/2004-ST and Notification No. 1/2006-ST dated 01.03.2006. - Held that: - the issue is squarely covered by the larger Bench decision of the Tribunal in favor of the appellant in the case of Bhayana Builders Pvt. Ltd. vs. CST, Delhi [2013 (9) TMI 294 - CESTAT NEW DELHI (LB)] where it was held that the value of the goods and material supplied free of cost by a service recipient to the provider of the taxable service, being neither monetary or non-monetary consideration paid or flowing from the service recipient, accruing to the benefit of the service provider, would be outside the taxable value of the goods amount charged under the said notification - appeal allowed - decided in favor of appellant. Issues:1. Appeal against order-in-appeal regarding service tax on erection, commissioning, and installation of electricity transmission towers.Analysis:The appellant, working for the Madhya Pradesh Electricity Board, filed an appeal against the order-in-appeal passed by the Commissioner (Appeals), Customs, Central Excise & Service Tax, Bhopal. The appellant was paying service tax on activities related to the erection, commissioning, and installation of electricity transmission towers supplied by the electricity recipient. The department treated the cost of the towers as part of the assessable value, leading to the initiation of proceedings and a demand for payment. The appellant contested this treatment, leading to the present appeal.During the hearing, it was noted that the appellant had been paying service tax based on certain notifications. After considering the arguments presented by both parties, the Tribunal referred to a previous decision in the case of Bhayana Builders Pvt. Ltd. vs. CST, Delhi. In that case, it was held that goods and materials supplied free of cost by a service recipient to the provider of a taxable service, which do not constitute consideration paid or flowing from the service recipient, should not be included in the taxable value. The Tribunal, following the precedent set in the Bhayana Builders case, found no merit in the impugned order and set it aside.As a result of the Tribunal's decision, the appeal filed by the appellant was allowed, providing them with consequential relief. The Tribunal's ruling was based on the interpretation of the law and the application of relevant legal principles, ultimately leading to a favorable outcome for the appellant in this case.