TaxTMI 
TaxTMI 
2026 (1) TMI 1441
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....e Order-in-Original No. 01/ADC/ST/Kol/2013-14 dated 30.08.2013, wherein he has confirmed the demand of service tax of Rs. 36,48,582/ including cesses under Section 73(2) of the said Act and appropriated the amount already paid by the appellant. He also imposed a penalty of Rs. 36,48,582/ under Section 78 of the said Act. 1.1. The appellant preferred an appeal before the Ld. Commissioner of Central Excise (Appeal-I), Kolkata against the confirmation of service tax, as above, along with cesses, after payment of penalty of Rs. 9,12,146/ (25% of service tax) on 04.10.2013. The Ld. Commissioner (Appeals) vide Order-in-Appeal No. 93/ST-I/KOL/2017 dated 14.03.2017, upheld the demands confirmed in the Order-in-Original dated 30.08.2013. 1.2. Aggrieved by the confirmation of service tax, along with interest and penalty, the appellant has filed this appeal. 2. The appellant contested the demands confirmed in the impugned order on the ground of limitation. It is their submission that the differential service tax has been demanded and confirmed on the allegation that the appellant has not included the value of the free issue materials as provided under Notification No. 23/2009-ST date....
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....ch is required in case of demand for the extended period; accordingly, the appellant contends that the demand raised without invoking the proviso to Section 73(1) of the said Act, is barred by limitation. It is further contended demand is also barred by limitation since the notice was issued after one year and five month from the date of audit. 2.2. In support of the above contentions, the appellant has relied on the following decisions:- (i) The decision of the CESTAT, SZB, Bangalore in the case of Aditya College of Competitive Exam. Vs. C.C.E., Visakhapatnam reported in 2009(16)S.T.R. 154, wherein it has been decided that larger period not invocable when show cause notice was issued based on audit objection; (ii) The decision of the CESTAT, WZB, Ahmedabad in the case of Vikrant Ispat Vs. C.C.E., Raigad reported in 2007(8)S.T.R. 559 wherein the Tribunal has observed that the Department cannot allege suppression of fact and invoke larger period of limitation on the basis of observation of Audit; (iii) The decision of CESTAT, WZB, Ahmedabad in the case of Cambay Organics Pvt. Ltd. Vs. C.C.E., Vadodara reported in 2007(217) EL..T. 586, wherein it has bee....
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....to Notification No. 23/2009-ST dated 07.07.2009. The appellant has contested the issue on merits as well as on limitation. 6. Regarding the ground of limitation raised by the appellant, we find that that the appellants were filing ST-3 returns regularly. It has been submitted by the appellant before us that they have filed the ST-3 return for the half year ending September, 2009 on 24.10.2009 (received by Sri P. S. Das, Superintendent) and the same was scrutinized by Sri S. P. Guha, on 10.11.2009, who, after scrutiny, gave the note as: "Pl pay the differential short paid interest for delay payment of S. Tax & Cess and intimate." We find that on 10.11.2009, the amendment to Notification No. 23/2009-ST dated 07.07.2009 had already come into effect. However, the officer who has scrutinised the return has not made any mention about non-inclusion of the value of free issue material in the assessable value for the purpose of payment of service tax, as provided under the amendment to Notification No. 23/2009-ST dated 07.07.2009. We observe that this led the appellant to believe that they were arriving at the correct assessable value. Thus, we agree with the submission of the appellant ....
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....gs, we hold that the demand confirmed by invoking extended period of limitation in the impugned order is not sustainable and hence we set aside the same. 7. Regarding merits of the issue, we find that the appellant has cited the decision of the CESTAT, Principal Bench, New Delhi in the case of Bhayana Builders (P) Ltd. v. Commissioner of Service Tax, Delhi reported in 2013(32)S.T.R. 49(Tri.- LB), wherein the Larger Bench has decided that value of free supply materials is not to be added to arrive at the gross value for determining the service tax liability. However, the Ld. Commissioner (Appeals) has not given any finding on the applicability of this decision to the appellant's case. From the facts of the case, we observe that the decision of the Larger Bench of the Tribunal in the case of Bhayana Builders (P) Ltd. (supra) is squarely applicable in this case. Further, it is seen that the above decision of the Larger Bench has been affirmed by the Hon'ble Apex Court as reported in 2018 (10) G.S.T.L. 118 (S.C.), wherein it has been laid down that the value of free supply materials is not includable in the assessable value. For ease of reference, the relevant observations of the Ho....