Tribunal rules in favor of appellant, excludes non-monetary considerations from taxable value for service tax

The Tribunal set aside the order confirming the demand of service tax with interest, ruling in favor of the appellant. It held that non-monetary considerations such as medical services, vehicles, stationery, and free accommodation should not be included in the taxable value for service tax, citing precedent cases including a decision by the Supreme Court. The Tribunal's decision aligned with the interpretation in M/s. Central Industrial Security Force (CISF) vs Commissioner of Service Tax, Pune, and the appeal challenging the confirmation of demand of service tax with interest was allowed.

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Issues:
The judgment involves the following Issues:
1. Liability to pay service tax on non-monetary consideration.
2. Invocation of extended period of limitation under the proviso to section 73 of the Finance Act 1994.

Issue 1: Liability to pay service tax on non-monetary consideration
The appellant was alleged to have not discharged service tax on non-monetary consideration such as free accommodation, medical facilities, vehicle and telephone insurance, and stationery and other expenses for the period April 2009 to March 2012. The Joint Commissioner confirmed the demand of service tax with penalty and interest, which was partially allowed by the Commissioner (Appeals), upholding the confirmation of demand of service tax with interest. The appellant challenged this portion of the order.

Issue 2: Invocation of extended period of limitation
The show cause notice dated 12.03.2014 invoked the extended period of limitation under the proviso to section 73 of the Finance Act 1994. The appeal was filed to challenge the confirmation of demand of service tax with interest based on this extended period.

The appellant argued that the value of non-monetary consideration should not be included in the taxable value, citing a decision in M/s. Central Industrial Security Force (CISF) vs Commissioner of Service Tax, Pune. The authorized representative for the department acknowledged that the issue was covered by the Tribunal's decision in CISF, which relied on previous decisions to support the exclusion of certain expenses from the assessable value for service tax.

The Tribunal, in line with the decision in CISF, held that expenses like medical services, vehicles, stationery, and free accommodation provided to CISF should not be included in the taxable value for service tax. The Tribunal noted that the legal position on this issue had been settled by previous judgments, including those of the Supreme Court. Therefore, the impugned order confirming the demand of service tax with interest was set aside, and the appeal was allowed.

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