TaxTMI 
TaxTMI 
2019 (11) TMI 385
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....ation and clearance, excavation, earthmoving and demolition service and survey and exploration of mineral service which are taxable under sections 65 (97a) and 65 (104a) of Finance Act, 1994 ^the Act. The show cause notice makes a demand of service tax amounting to Rs. 29,85,126/- for the period from September 2004 to May 2007. The above-mentioned amount of the service tax demanded under Section 73 of the Act has been bifurcated. Service tax demand of Rs. 20,80,178/- pertains to site formation and clearance, excavation service and a demand of Rs. 9,66,504/- on account of inclusion of the value of free supply of the explosives in the taxable value for calculation of service tax. 2. The matter was adjudicated by the Additional Commissioner....
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....tment preferred an appeal before the Commissioner (Appeals) on the ground that the Additional Commissioner had wrongly dropped the demand of Rs. 9,66,504/- and the adjudicating authority should have confirmed the service tax leviable on the value the free supplies made by the recipient of the service considering the same as part of taxable value as per provisions of Section 67 of Act and penalty should have been imposed under Section 76, 77 and 78 of the Finance Act, 1994. The learned Commissioner (Appeals) in his order-in-appeal dated 22 November 2013 held as follows :- "6. ... On going through the Order-in-Original it is seen that the Adjudicating authority had mentioned that the respondent had received explosives free of cost fr....
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....posited the tax before issue of show cause notice the issue involved interpretation which was clarified by Board penalty under Section 76, 77 and 78 was not imposed. Though he has not explicitly quoted Section 80 of the Act but it is obvious that he has cited reasonable cause for not paying tax by the respondent. Therefore, I think the decision of the Adjudicating authority on the issue of penalty needs no modification". 4. It is seen that the Commissioner (Appeals) observed that the Additional Commissioner took the value of the free supply of the explosives as amount of the service tax and dropped the same. Feeling aggrieved by the order passed by the Commissioner (Appeals), this appeal has been filed. 5. The learned Counsel appearin....
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....f the taxable service or not in terms of the provisions of the Act. In this regard, we find that the issue at hand has already been decided by Supreme Court in Commissioner of Service Tax versus Bhayana Builders (P) Ltd. reported in 2018 (10) G.S.T.L. 118 (S.C.) wherein it has been held that for levy of the service tax as per the provision of Section 67 of the Act the gross amount charged by the service provider from the service recipient means the amount which is billed by the service provider on the service recipient in the invoice and, therefore, the free supplies provided by service recipient to the service provider cannot form part of the taxable value of service. The relevant extract of the above-mentioned judgment is reproduced below....
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..../material supplied by the service recipient for determination of the gross value. 14. We may note at this stage that Explanation (c) to sub-section (4) was relied upon by the learned counsel for the Revenue to buttress the stand taken by the Revenue and we again reproduce the said Explanation hereinbelow in order to understand the contention : "(c) gross amount charges" includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debit notes and [book adjustment, and any amount credited or debited, as the case may be, to any account, whether called 'suspense account' or by any other name, in the books of account of a person liable to pay service tax, where the transact....
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.... no amount was credited or debited in any account. In fact, this last portion is related to the debit or credit of the account of an associate enterprise and, therefore, takes care of those amounts which are received by the associated enterprise for the services rendered by the service provider. 16. In fact, the definition of "gross amount charged" given in Explanation (c) to Section 67 only provides for the modes of the payment or book adjustments by which the consideration can be discharged by the service recipient to the service provider. It does not expand the meaning of the term "gross amount charged" to enable the Department to ignore the contract value or the amount actually charged by the service provider to the service rec....