TaxTMI 
TaxTMI 
2022 (9) TMI 1061
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....red in favour of the Applicant by the decision of the Hon'ble CESTAT in the matter of M/s. Vantage International Management Company v. CCGST, 2021 (2) TMI 564 CESTAT MUMBAI and M/S. Greatship (India) Ltd. v. CST, 2021 (9) TMI 1173 - CESTAT MUMBAI. In both these decisions, the Hon'ble CESAT has followed the principle laid down in the case of Bhayana Builders (P) Ltd. and Others. 2013-TIOL-1331-CESTAT-DEL-LB upheld by the Hon'ble Supreme Court in CST v. Bhayana Builders (P) Ltd., 2018 -TIOL-66-SC-ST." 2.1 We have heard Shri Punit Agarwal, Advocate for the applicant and Shri Anand Kumar, Additional Commissioner, Authorised Representative for the Revenue. 3.1 Both sides agree that the issue involved in the present case is squarely covered by the decisions referred to in para 3 of the application. Considering this, we allow these applications for early hearing. 4.1 After obtaining consent of both parties, the appeals have been heard on merits. 4.2 The facts as stated in paras 3 and 4 of the impugned order in appeal No. ST/85892/2020 are reproduced below:- "3. It appears that supply of Diesel, consumables, transportation, equipment etc., free of cost was nothing but add....
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....s that the notification no. 04/2005-ST dated 0.03.2005 is ultra vires to the provisions of Section 67(1) because this notification has prescribed to include the value of goods and material' in the gross amount charged', however, the scope of phrase 'gross amount charged' is inherently limited to only 90 monetary considerations in terms of section 67(1)(i) which cannot be made to include any nonmonetary consideration in its scope. However, this does not mean that the Larger Bench or the Hon'ble Supreme Court has struck down the provisions of Section 67(1)(ii). which clearly and unambiguously provides for inclusion of any 'non-monetary considerations, including the value of the supply of goods, if it is for of any taxable services. The Hon'ble Supreme Court has clearly held that service tax cannot be charged on goods. However, this is not a case of charging service tax on goods, but on the non monetary consideration for providing taxable services, value of which has to be included in taxable value in terms of Section 67(1)(ii) and the ratio of the Judgement of the Hon'ble Supreme Court cannot applied herein simply because the said Judgement has been de....
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....nstant case before me, there is no dispute about the fact that the subject repair material diesel and equipments have been supplied free of cost by ONGC for providing subject taxable service, which is chargeable to service tax in terms of Section 65B(44) read with Section 66B of the Finance Act, 1994. Hence, it cannot be denied that the "Diesel, consumables, equipment, etc. have a nexus with the taxable "Mining Service" being provided by the Noticee. Without use of "Diesel, consumables, equipment, etc.", the Mining Service cannot be performed. Hence, the cost of "Diesel, Consumables, equipments, etc." is consumed for such Mining Service performed. The recipient of said taxable services namely ONGC has otherwise no occasion to supply the said material etc. to the notice. 29. In view of above findings. I am of the view that the cost of free supply of "Diesel, consumables, equipment, etc." from ONGC should be included in the taxable value of the Mining Services' provided by the Noticee. I, therefore, confirm the demands on the merits of the case." 4.4 From the above, it is evident that the Principal Commissioner has sought to distinguish the decision of Larger Bench of the Trib....
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....ooks of account of a person liable to pay service tax, where the transaction of taxable service is with any associated enterprise.]" [emphasis supplied] 15. It was argued that payment received in 'any form' and 'any amount credited or debited, as the case may be...' is to be included for the purposes of arriving at gross amount charges and is leviable to pay service tax. On that basis, it was sought to argue that the value of goods/materials supplied free is a form of payment and, therefore, should be added. We fail to understand the logic behind the aforesaid argument. A plain reading of Explanation (c) which makes the 'gross amount charges' inclusive of certain other payments would make it clear that the purpose is to include other modes of payments, in whatever form received; be it through cheque, credit card, deduction from account etc. It is in that hue, the provisions mentions that any form of payment by issue of credit notes or debit notes and book adjustment is also to be included. Therefore, the words 'in any form of payment' are by means of issue of credit notes or debit notes and book adjustment. With the supply of free goods/materials by the service recipient, no ca....
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.... services as well as supply of goods, the said notifications were issued for the convenience of the assessees. According to the Revenue, the purpose was to bifurcate the component of goods and services into 67% : 33% and to provide a ready formula for payment of service tax on 33% of the gross amount. It was submitted that this percentage of 33% attributing to service element was prescribed keeping in view that in the entire construction project, roughly 67% comprises the cost of material and 33% is the value of services. However, this figure of 67% was arrived at keeping in mind the totality of goods and materials that are used in a construction project. Therefore, it was incumbent upon the assessees to include the value of goods/material supplied free of cost by the service recipient as well otherwise it would create imbalance and disturb the analogy that is kept in mind while issuing the said notifications and in such a situation, the AO can deny the benefit of aforesaid notifications. This argument may look to be attractive in the first blush but on the reading of the notifications as a whole, to our mind, it is not a valid argument. 18. In the first instance, no material is ....