Service tax valuation excludes recipient-owned materials supplied at site for erection and commissioning, leaving the related demand unsustainable.
Materials purchased in the service recipient's name and supplied at site for erection, commissioning and installation were held not to form part of the gross value of taxable services where the appellant neither purchased nor sold the goods to the recipient. Because the invoices showed the materials belonged to the recipient and were used in providing the service, their value could not be added to the taxable service value. The earlier remand on Notification No. 12/2003-ST was inapplicable on these facts, as it concerned goods sold to the recipient. The demand attributable to the Suzlon contract material value was therefore set aside, while the L&T contract order remained undisturbed.
Issues: Whether, in relation to the services provided to the service recipient, the value of materials purchased in the name of the service recipient and supplied at site for erection, commissioning and installation could be included in the gross value of taxable services, and whether the demand attributable to such material value was liable to be set aside.
Analysis: The material for the Suzlon contract was not purchased by the appellant and was not sold by it to the service recipient. The invoices for the supply of material were in the name of the service recipient, showing that the material belonged to the recipient and was used for carrying out the service. On that basis, the value of such material did not form part of the gross value of the service rendered by the appellant. The earlier remand regarding availability of Notification No. 12/2003-ST applied only where goods were sold to the service recipient, and the facts here did not justify inclusion of the material value in taxable value.
Conclusion: The demand attributable to the material value relatable to the Suzlon contract was unsustainable and was set aside. The order concerning the L&T contract was left undisturbed.
TaxTMI 
AI Drafter ✕
TaxTMI 
