2017 (10) TMI 407

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.... The Department issued a show cause notice dt. 12.2.2013 contending that the free supply material should be included in the gross value under the composition scheme of works contract accordingly there is a short payment of service tax. The adjudicating authority confirmed the demand and imposed penalty under Section 78 of the Finance Act, therefore the appellant filed the present appeal. 2. Shri Sanadan Khairnar, Ld. Counsel appearing on behalf of the appellant submits that free supply material is not required to be included in the gross value of service of works contract. In the light of the Larger Bench judgement in the case of Bhayana Builders Pvt. Ltd. Vs. Commissioner of Service Tax Delhi - 2013 (32) STR 449 (Tri.LB) he also relied up....

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....urther submits that as regard the free supply material there is no consideration towards that material the service tax is chargeable only on the consideration received in money. In this regard he placed reliance on the decision of Delhi High Court in the case of Intercontinental Consultants & Technocrats Pvt. Ltd. Vs. UOI - 2013 (29) STR 9 (Del.). He further submits that the demand was raised for the extended period in the present case. There is no suppression of fact because the issue involved is of interpretation of law as the confusion was prevailing that whether free supply material was to be included in the value of the works contract service. On this issue various judgments given by various forumsas cited above, therefore the issue wa....

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....any doubt or confusion. The submission of the Ld. Counsel that there was an issue involved is of interpretation of law does not hold good for the reason that the judgments referred by him are not applicable in the facts of the present case. For this reason there is a clear case of suppression of fact therefore demand of extended period as well as penalty under Section 78 of the Act is sustainable. 4. We have carefully considered the submissions made by both the sides. We find that the judgments relied upon by the appellant mainly on the case of Bayana Builders (supra) of Larger Bench and G.R. Construction and Company Delhi Tribunal. On going through these judgments, we find that the issue relates to the eligibility of the abatement Notific....

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....hich for a consideration or otherwise should be added. Therefore it is clear that whether the goods used by the service provider or otherwise supplied by the service recipient free of cost, value of all the goods should be included to arrive at the gross value of works contract. Therefore in our considered view the value of free supply material also be added in the gross value of works contract, therefore the demand is sustainable on merit. As regard limitation, we find from the contract dt. 21.3.2011 between the service recipient and the appellant wherein the following condition is provided. "The Contract Price is inclusive of any applicable statutory payments like Vat, Provident Fund, Labour Welfare Cess, taxes and duties, insurance etc.....