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of <h1>Tribunal ruling on taxable value, TDS, penalties, and service demand in favor of assessee</h1> <h3>H. Kannan, Prop. of Unikans Versus CCE & ST Madurai And Vice-Versa</h3> H. Kannan, Prop. of Unikans Versus CCE & ST Madurai And Vice-Versa - TMI Issues involved:1. Non-inclusion of value of cost of materials supplied free of cost by the service recipient in taxable value.2. Non-payment of service tax on services provided to educational institutions.3. Non-inclusion of TDS amounts in taxable value.Detailed Analysis:1. The assessee, a proprietary concern, provided services under the category of 'Commercial or Industrial Construction Service' (CICS). Discrepancies were found during an audit, including the non-inclusion of the value of materials supplied free of cost by the service recipient in the taxable value. The department contended that service tax should be paid on the gross amount received, leading to a demand of Rs. 1,20,74,688 for the period 1.10.2004 to 31.03.2009. The adjudicating authority confirmed a total amount of Rs. 1,09,61,287 with interest and penalty. The assessee appealed against the tax demand and penalty under Section 78, while the department appealed against the dropping of demand related to services provided to educational institutions and penalties under Section 76 and Section 77.2. The issue of taxability on services provided to educational institutions was contested. The department argued that educational institutions are commercial buildings and service tax is chargeable on the gross amount received. The department also raised concerns about the non-imposition of penalties under Sections 76 and 77. The department's appeal was based on the grounds that penalties under these sections should have been imposed.3. The advocate for the assessee argued that the issue of including the value of goods supplied free of cost had been settled by the Supreme Court in a specific case, stating that such values should not be added to the taxable value. The advocate also contended that penalties were rightly dropped as the issue was interpretational. The Tribunal found merit in the advocate's assertion and set aside the tax demand related to the value of free supplies. Regarding the TDS amounts, the Tribunal agreed that they should be included in the taxable value but remanded the case to re-quantify the demand considering a possible abatement of 67%. The demand related to services provided to educational institutions was rejected based on previous Tribunal decisions in favor of the assessee.4. The Tribunal concluded by allowing the assessee's appeal on the issue of free supplies, remanding the issue of TDS for re-quantification, setting aside the penalty under Section 78, and dismissing the department's appeal. The judgment highlighted the clarity provided by previous Tribunal decisions and the confusion surrounding the inclusion of TDS amounts, leading to the decision to set aside penalties under Sections 76 and 77. Both appeals were disposed of accordingly.
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