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of <h1>Tribunal Overturns Service Tax Demand for Site Formation & Free Supplies</h1> <h3>M/s. Teknomin Construction Ltd. Versus C.C.E. & S.T., Jaipur</h3> M/s. Teknomin Construction Ltd. Versus C.C.E. & S.T., Jaipur - 2017 (4) G. S. T. L. 65 (Tri. - Del.) Issues:1. Taxability of services under the category of site formation service.2. Taxability of free supplies received by the appellant.Issue 1: Taxability of services under the category of site formation service:The appeal was against the confirmation of a service tax demand of &8377; 21,58,467/- under the category of site formation service. The appellant argued that the services provided were auxiliary to mining and should be categorized as mining services, taxable from 01.06.2007 onwards. The Tribunal referred to a previous case, M/s. Aravali Construction Co. Pvt. Ltd. vs. CCE, Jaipur-II, where it was held that activities ancillary to mining should not be taxed under site formation service. The Tribunal cited relevant case laws and concluded that the demand of service tax under site formation service could not be sustained and was dropped.Issue 2: Taxability of free supplies received by the appellant:The appellant contested the demand of service tax of &8377; 44,66,679/- on free supplies received from the service recipient, arguing that such supplies should not be included in the taxable value of services rendered. The appellant relied on the case of Bhayana Builders P. Ltd. where it was clarified that free supplies do not constitute consideration accruing to the benefit of the service provider and should not be included in the taxable value. The Tribunal concurred with this interpretation, citing the scope of Section 67 of the Finance Act, and held that the demand of service tax on free supplies was not sustainable. Therefore, the demand was dropped.In conclusion, the Tribunal allowed the appeal with consequential relief, if any, on 11.04.2017, based on the findings related to the taxability of services under the category of site formation service and the taxability of free supplies received by the appellant.
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