TaxTMI 
TaxTMI 
2021 (2) TMI 49
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on this amount. The agreements also provided that HCL shall provide certain items on free of cost basis to the appellant. The issue involved in this appeal is about the inclusion of the value of items supplied on free of cost basis by the service recipients to the appellant in the value of mining services provided by the appellant. The appellant believed that providing of such items on free of cost basis was a mere condition of the contract and not a consideration for provision of mining services by the appellant. It, therefore, did not include the value of such items in the taxable value of its mining services. 3. However, a show cause notice dated October 23, 2015 was issued to the appellant mentioning therein : "8. Whereas in view of the above, it appeared that the money value of items supplied free of cost such as diesel, explosives, blasting accessories, electricity and other items etc. by M/s HCL was includible in the value of taxable service provided by the service provider during the period from April-2010 to March-2015. M/s HCL, Khetrinagar had supplied the consumable terms such as detonators, explosives, diesel, other open items etc. & electricity free of cos....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e distinct characteristics and execution and cannot be equated. I do not find much force in the contention made by the assessee." (emphasis supplied) 7. The aforesaid order of the Commissioner is based on the fact that without use of the items supplied on free of cost basis, the appellant could not have provided mining services and thus, the value of these items has to be included in the taxable value of mining services. The decision of a larger bench of the Tribunal in Bhayana Builders (P) Limited vs CST, Delhi, 2013 (32) STR 49 (Tri-LB), was found not to be applicable as it was concerned with construction services. 8. Shri B.L Narasimhan, learned counsel appearing for the appellant has made the following submissions: (i) The value of free of cost items provided by the service recipient, i.e HCL, to the appellant does not form part of the taxable value of mining service provided by the appellant. Valuation of taxable services is governed by section 67 of the Finance Act, 1994, the Finance Act. When service is provided for a consideration "not wholly or partly consisting of money‟, section 67(1)(ii) provides that the value shall be such amount in money, as w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Vs. Commr. of C.EX. Cus & S.T., Nashik, 2018 (11) GSTL 106 (Tri-Mumbaid). 10. The submissions advanced by the learned counsel for the appellant and the learned Authorized Representative of the Department have been considered. 11. The issue involved in this appeal is as to whether the value of items supplied free of cost by service recipient to the appellant have to be included in the value of mining services provided by the appellant. 12. This precise issue came up for consideration before the Supreme Court in Bhayana Builders as the issue before the Supreme Court was also whether the value of goods/material supplied or provided free of cost by a service recipient and used for providing the taxable service of construction or industrial complex is to be included in the computation of gross amount for valuation of the taxable service under section 67 of the Finance Act. The Supreme Court observed that a plain reading of the expression "the gross amount charged by the service provider for such service provided or to be provided by him‟ would lead to the conclusion that the value of goods/material that is provided by the service recipient free of charge is not to be incl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment Notification No. 15/04-S.T. whereunder 67% abatement from the value of construction service provided. In the present case undisputedly service is of 'works contract'. As regard works contract the relevant provision under the Works Contract (Composition Scheme for Payment of Service Tax) Rules, 2007 reads as under : ***** ***** ***** From the above Explanation clause (a)(1) which can be seen that for the purpose of value of goods used in or in relation to the excecution of the works contract value of all the supplies which 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. (emphasis supplied) 16. The said decision relied upon by learned Authorized Representative would not be applicable to the facts of the present case. This is for the reason that the show cause notice issued by ....