2023 (3) TMI 738

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....e records, it was found that the service receiver had provided steel, cement and concrete pipes for the said work. The department was of the view that as the appellant has received free supply of materials, they are not eligible to claim abatement under Notification No. 1/2006-ST. Show Cause Notice dated 15.09.2011 was issued to the appellant. After due process of law, the original authority confirmed service tax of Rs.72,113/- along with interest and imposed penalty. On appeal, the Commissioner (Appeals) upheld the same. Hence this appeal. 2. Learned Counsel Shri V. Ravindran appeared and argued for the appellant. He submitted that the issue as to whether the value of the free supply of materials has to be included in the taxable value ....

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....rged by the service provider, for valuation of taxable service. For valuation of taxable service, provision is made in Section 67 of the Act which enumerates that it would be "the gross amount charged by the service provider for such service provided or to be provided by him". Whether the value of materials/goods supplied free of cost by the service recipient to the service provider/assessee is to be included to arrive at the "gross amount", or not is the poser. On this aspect, there is no difference in amended Section 67 from unamended Section 67 of the Act and the parties were at ad idem to this extent. 12. On a reading of the above definition, it is clear that both prior and after amendment, the value on which service tax is pay....

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....t a consideration for the service provided does not become part of the value which is taxable under Section 67. The cost of free supply goods provided by the service recipient to the service provider is neither an amount "charged" by the service provider nor can it be regarded as a consideration for the service provided by the service provider. In fact, it has no nexus whatsoever with the taxable services for which value is sought to be determined" .......................... ......................... 18. In the first instance, no material is produced before us to justify that aforesaid basis of the formula was adopted while issuing the notification. In the absence of any such material, it would be anybody"s guess ....