TaxTMI 
TaxTMI 
2012 (7) TMI 324
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....inoriginal dated 22nd September 2009 is the question raised in this appeal. The appeal is admitted on the above question and taken up for hearing by consent of both the parties to the appeal. 2. The appellant - assessee is inter alia engaged in setting up airseparation plant (equipments for short) at the customers premises. The said equipments are used for manufacturing the oxygen which is ultimately used by the customers in manufacturing their final products. The equipments owned by the assessee are leased to its customers and the assessee enters into an agreement with the respective customer for operating and maintaining the equipments given on lease at a consideration mutually agreed upon by and between the assessee and its customers.....
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.... upon to showcause as to why the value of taxable service should not be enhanced by including the cost of electricity supplied free of cost to the assessee by the customers in the course of rendering the services. The assessee contended that the electricity supplied free of cost was not a consideration received by the assessee for rendering the services and, hence, the same was not includible in the taxable service. 6. By an orderinoriginal dated 22nd September 2009, the Adjudicating Authority rejected the contention of the assessee and confirmed the tax demand amounting to Rs. 3.31 crores with interest and penalty. Challenging the aforesaid order, the Revenue filed an appeal and the CESTAT by the impugned order dated 16th November 2011 ....
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....ax payable, is equal to the gross amount charged. (3) The gross amount charged for the taxable service shall include any amount received towards the taxable service before, during or after provision of such service. (4) Subject to the provisions of subsections (1), (2) and (3), the value shall be determined in such manner as may be prescribed. Explanation. For the purposes of this section, (a) "consideration" includes any amount that is payable for the taxable services provided or to be provided; (b) "money" includes any currency, cheque, promissory note, letter of credit, draft, pay order, travellers cheque, money order, postal remittance and other similar instruments but does not include currency that is held for its numismatic v....
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....or rendering the service is charged partly in terms of money and partly in kind, then, the value taxable service would be the money actually received plus the money equivalent to the consideration received in kind. In the present case, it is the case of the Revenue that since the electricity is supplied free of cost for maintaining and operating the equipments, the cost of electricity supplied shall form part of the consideration received in kind and, hence, the cost of electricity supplied free of cost is liable to be included in the taxable service. 11. Prima facie, we find it difficult to accept the argument of the Revenue that the electricity supplied free of cost is a consideration in kind received by the assessee from its customers....