Sabka Vishwas finality and service tax valuation: later notice barred, free supplies excluded, and NOIDA's corporate status upheld.

A discharge certificate issued under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 was treated as conclusive for the matter and period covered in a litigation declaration, so a later show cause notice on the same subject could not survive and was quashed. The taxable value of works contract services could not be enlarged by adding free-of-cost materials supplied by the recipient, as such items were outside the contractual consideration and irrelevant to valuation. NOIDA was held to be a body corporate under the governing statute, so the contrary premise in the notice was untenable and could not be used to fasten full service tax liability.

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Issues: (i) Whether a discharge certificate issued under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 barred a later show cause notice for the same matter and period; (ii) whether the value of free-of-cost material supplied by the recipient could be included in the taxable value of works contract services; (iii) whether NOIDA could be treated as not being a body corporate so as to fasten full service tax liability on the petitioner.

Issue (i): Whether a discharge certificate issued under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 barred a later show cause notice for the same matter and period.

Analysis: The declaration was made in the litigation category against a pending show cause notice and not as a voluntary disclosure. Once the declaration was accepted and a discharge certificate was issued, the statutory consequence under the Scheme was finality as to the matter and time period covered. The later notice proceeded on the same period of service tax liability and did not create a distinct subject matter merely because it relied on additional factual assertions discovered during investigation.

Conclusion: The later show cause notice was barred and liable to be set aside.

Issue (ii): Whether the value of free-of-cost material supplied by the recipient could be included in the taxable value of works contract services.

Analysis: The taxable value of services cannot be enlarged by adding the value of goods supplied free of cost by the service recipient when such value is not part of the contractual consideration. The legal position had already been settled that free supply items have no relevance in determining the value of taxable services.

Conclusion: The Revenue's premise on inclusion of free-of-cost material was rejected.

Issue (iii): Whether NOIDA could be treated as not being a body corporate so as to fasten full service tax liability on the petitioner.

Analysis: The governing statute expressly provided that the authority shall be a body corporate. An authority constituted by statute is distinct from a body merely incorporated under a general company law, and the statutory text left no room to treat NOIDA as lacking corporate status. The contrary assumption in the notice was therefore untenable.

Conclusion: The Revenue's premise regarding NOIDA's status was rejected.

Final Conclusion: The petition succeeded, the impugned show cause notice was quashed, and the petitioner was held entitled to the protection arising from the discharge certificate under the Scheme.

Ratio Decidendi: A discharge certificate issued under the Sabka Vishwas Scheme is conclusive for the matter and period covered in a litigation declaration, and a subsequent notice on the same matter and period cannot survive; taxable value cannot include free supplies outside the contract, and a statutory authority expressly constituted as a body corporate cannot be denied that status on an erroneous factual premise.

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