Tribunal excludes free materials from service tax calculation, rules in favor of Appellant The Tribunal ruled in favor of the Appellant, holding that the free supply of materials was not part of the gross value for service tax calculation as per ...
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Tribunal excludes free materials from service tax calculation, rules in favor of Appellant
The Tribunal ruled in favor of the Appellant, holding that the free supply of materials was not part of the gross value for service tax calculation as per the agreement. Citing a Larger Bench ruling and Supreme Court affirmation, the Tribunal set aside the impugned order, entitling the Appellant to consequential benefits in accordance with the law.
Issues Involved: The issue involved is whether the Appellant assessee is liable to service tax for non-inclusion of value of free supply of materials in the gross amount for arriving at the taxable turnover for payment of service tax.
Comprehensive Details of the Judgment:
Issue 1: Liability for Service Tax on Non-Inclusion of Value of Free Supply of Materials The Appellant entered into a contract for providing certain works where the principal supplied materials free of cost. The revenue contended that the Appellant should pay service tax on the whole amount received without abatement, as the value of free materials was not included in the gross value for abatement calculation. The Show Cause Notice alleged contravention of provisions and short payment of service tax, invoking extended limitation period.
Issue 2: Adjudication and Appeal The show cause notice was contested, and the Commissioner confirmed the demand based on a previous Tribunal ruling. The Appellant appealed, arguing that the free supply of materials was not part of the gross value as per the agreement between the parties. Reference was made to a Larger Bench ruling that held free supply of materials cannot be added to the gross value for service tax calculation.
Judgment and Conclusion The Tribunal found that the free supply of materials was not part of the gross value of the contract as per the agreement. Citing the ruling of the Larger Bench and the affirmation by the Supreme Court, the Tribunal ruled in favor of the Appellant. The impugned order was set aside, and the Appellant was entitled to consequential benefits in accordance with the law.
(Order dictated and pronounced in open court)
Full Summary is available for active users!
Note: It is a system-generated summary and is for quick reference only.
TaxTMI 
of 
Join Channel
TaxTMI 
