CESTAT grants abatement for free materials, following SC precedent

The Appellate Tribunal CESTAT Ahmedabad ruled in favor of the appellant, holding that they were entitled to abatement under specific notifications even when the value of material supplied free of cost by the service recipient was not included in the gross value of the service provided. Citing a Supreme Court decision, the Tribunal set aside the lower authority's denial of abatement, emphasizing that the appellant could avail the benefit as per the relevant notifications. The decision aligned with the precedent established by the Supreme Court, providing clarity on the issue and allowing the appeal in favor of the appellant.

---

---

Issues:
Entitlement for abatement under Notification No. 15/2004-ST or 01/2006-ST when material supplied free of cost by service recipient not included in gross value of service.

Analysis:
The judgment by the Appellate Tribunal CESTAT Ahmedabad involved a crucial issue regarding the entitlement of abatement under specific notifications when the value of material supplied free of cost by the service recipient was not included in the gross value of the service provided. The appellant contended that the issue was settled by a decision of the Hon'ble Supreme Court in the case of Commissioner of Service Tax vs. M/s. Bhayana Builders, wherein it was established that even if the value of the free supply of material was not included in the gross value of the service, the appellant would still be entitled to the abatement under the relevant notifications.

During the proceedings, the Ld. Counsel for the appellant referenced the Supreme Court decision, while the Ld. Superintendent (AR) representing the Revenue reiterated the findings of the impugned order. After hearing both sides and examining the records, the Tribunal noted that the issue in question had already been settled by the Supreme Court in the case of M/s. Bhayana Builders. The Tribunal concurred with the Supreme Court's decision, which affirmed that the appellant could avail the abatement under the notifications even if the value of the free material supply was not included in the gross value of the service provided.

Consequently, the Tribunal held that the demand raised by the lower authority, which denied the abatement, was not sustainable in light of the Supreme Court's ruling. Therefore, the impugned order was set aside, and the appeal was allowed in favor of the appellant. The Tribunal's decision provided clarity on the entitlement for abatement under the specified notifications in cases where the value of material supplied free of cost by the service recipient was not factored into the gross value of the service provided, aligning with the precedent set by the Supreme Court.

---