Interim Order Nos. ST/394-417/2013-Cus (DB), in Application Nos. ST/Stay/1846-1847/2010 in Appeal Nos. ST/247, 52-53, 65, 97, 119, 158, 236, 503, 601, 621, 629, 746/2008, ST/334, 422, 436, 469, 482, 490, 510/2009, ST/935-936, 1075/2010 and ST/55615/2013. Case: Bhayana Builders (P) Ltd. Vs Commissioner of Service Tax, Delhi. CEGAT (Customs, Excise & Gold (Control) Appellate Tribunal) & CESTAT (Customs, Excise and Service Tax Appellate Tribunal)

Case NumberInterim Order Nos. ST/394-417/2013-Cus (DB), in Application Nos. ST/Stay/1846-1847/2010 in Appeal Nos. ST/247, 52-53, 65, 97, 119, 158, 236, 503, 601, 621, 629, 746/2008, ST/334, 422, 436, 469, 482, 490, 510/2009, ST/935-936, 1075/2010 and ST/55615/2013
CounselFor the Appellant: S/Shri V. Lakshmikumaran, Ms. Swati Gupta, P.K. Sahu, Prashant Shukla, J.K. Mittal, Jeetu Gupta, Prakash Shah, Dr. G.K. Sarkar, Prashant Srivastava, S.K. Gupta, S.K. Sarwal, Mukul Chandra, Ayush Mehrotra, Mayank Garg, Harpreet Singh & Sanjay Grover, Advocates, Nitesh Garg and A.K. Batra, CAs and A.K. Mishra, Consultant, for...
JudgesG. Raghuram, President, S/Shri Sahab Singh, Member (T) and Manmohan Singh, Member (T)
IssueFinance Act, 1994 - Section 67
Citation2013 (32) STR 49 (Tri. - LB)
Judgement DateSeptember 06, 2013
CourtCEGAT (Customs, Excise & Gold (Control) Appellate Tribunal) & CESTAT (Customs, Excise and Service Tax Appellate Tribunal)

Order:

G. Raghuram, President, (Larger Bench)

  1. By the order dated 5-4-2013 in ST/629/2008, a Division Bench of this Tribunal, noticing a conflict between decisions of two Division Benches; (a) in Cemex Engineers v. CST, Cochin - 2010 (17) S.T.R. 534 (Tri.-Bang.) and (b) in Jaihind Projects Ltd. v. CST, Ahmedabad - 2010 (18) S.T.R. 650 (Tri.-Ahmd.) referred, for the consideration of a Larger Bench the issue:

    (i) Whether the value of goods/material supplied or provided free by a service recipient and used for providing the taxable service of construction of commercial or industrial complex, must be included in computation of the gross amount (charged by the service provider), for valuation of the taxable service, under Section 67 of the Finance Act, 1994 (the Act). We notice at the hearing of these appeals however, that the issue specifically is: whether the value of the material supplied by the recipient of the taxable service free of cost (hereinafter, for convenience referred to as "free supplies") should also be included, for availing the benefits under Notification No. 15/2004-S.T., dated 10-9-2004 as amended by Notification No. 4/2005-S.T., dated 1-3-2005. The later Notification added an "Explanation" to Notification No. 15/2004-S.T.

  2. For the purposes of the issues referred to the Larger Bench, the several assessees/appellants; had provided commercial or industrial construction service, a taxable service enumerated in Section 65(105)(zzq). Commercial or Industrial Construction service means any service provided or to be provided to any person, by any other person, in relation to commercial or industrial construction service.

  3. Relevant Provisions:

    (a) Section 65(25b) defines construction or industrial construction service to mean:

    (a) construction of a new building or a civil structure or a part thereof; or

    (b) construction of pipeline or conduit; or

    (c) completion and finishing services such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and meal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services, in relation to building or civil structure; or

    (d) repair, alteration, renovation or restoration of, or similar services in relation to, building or civil structure, pipeline or conduit, which is -

    (i) used, or to be used, primarily for; or

    (ii) occupied, or to be occupied, primarily with; or

    (iii) engaged, or to be engaged, primarily in, commerce or industry, or work intended for commerce or industry, but does not include such services provided in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams;

    (b) Valuation of taxable services:

    Since the amendment w.e.f. 18-4-2006, Section 67 reads:

    "SECTION 67. Valuation of taxable services for charging service tax. - (1) Subject to the provisions of this Chapter, where service tax is chargeable on any taxable service with reference to its value, then such value shall, -

    (i) in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him;

    (ii) in a case where the provision of service is for a consideration not wholly or partly consisting of money, be such amount in money as, with the addition of service tax charged, is equivalent to the consideration;

    (iii) in a case where the provision of service is for a consideration which is not ascertainable, be the amount as may be determined in the prescribed manner.

    (2) Where the gross amount charged by a service provider, for the service provided or to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged.

    (3) The gross amount charged for the taxable service shall include any amount received towards the taxable service before, during or after provision of such service.

    (4) Subject to the provisions of sub-sections (1), (2) and (3), the value shall be determined in such manner as may be prescribed.

    Explanation. - For the purposes of this section, -

    (a) "consideration" includes any amount that is payable for the taxable services provided or to be provided;

    [(b)  *  *  * ]

    (c) "gross amount charged" 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 transaction of taxable service is with any associated enterprise."

    (c) Prior to substitution w.e.f. 18-4-2006 by the Finance Act, 2006, Section 67 read as follows:

    "67. Valuation of taxable services for charging service tax. - For the purposes of this Chapter, the value of any taxable service shall be the gross amount charged by the service provider for such service provided or to be provided by him.

    Explanation 1. - For the removal of doubts, it is hereby declared that the value of a taxable service, as the case may be, includes, -

    (a) the aggregate of commission or brokerage charged by a broker on the sale or purchase of securities including the commission or brokerage paid by the stock-broker to any sub-broker;

    (b) the adjustments made by the telegraph authority from any deposits made by the subscriber at the time of application for telephone connection or pager or facsimile or telegraph or telex or for leased circuits;

    (c) the amount of premium charged by the insurer from the policy holder;

    (d) the commission received by the air travel agent from the airline;

    (e) the commission, fee or any other sum received by an actuary, or intermediary or insurance intermediary or insurance agent from the insurer;

    (f) the reimbursement received by the authorised service station from manufacturer for carrying out any service of any motor car, light motor vehicle or two wheeled motor vehicle manufactured by such manufacturer; and

    (g) the commission or any amount received by the rail travel agent from the Railways or the customer,

    but does not include -

    (i) initial deposit made by the subscriber at the time of application for telephone connection or pager or facsimile (FAX) or telegraph or telex or for leased circuit;

    (ii) the cost of unexposed photography film, unrecorded magnetic tape or such other storage devices, if any, sold to the client during the course of providing the service;

    (iii) the cost of parts or accessories, or consumable such as lubricants and coolants, if any, sold to the customer during the course of service or repair of motor cars, light motor vehicle or two wheeled motor vehicles;

    (iv) the airfare collected by air travel agent in respect of service provided by him;

    (v) the rail fare collected by rail travel agent in respect of service provided by him;

    (vi) the cost of parts or other material, if any, sold to the customer during the course of providing maintenance or repair service;

    (vii) the cost of parts or other material, if any, sold to the customer during the course of providing erection, commissioning or installation service; and

    (viii) interest on loans.

    Explanation 2. - Where the gross amount charged by a service provider is inclusive of service tax payable, the value of taxable service shall be such amount as with the addition of tax payable, is equal to the gross amount charged.

    Explanation 3. - For the removal of doubts, it is hereby declared that the gross amount charged for the taxable service shall include any amount received towards the taxable service before, during or after provision of such service."

    (i) in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him;

    (ii) in a case where the provision of service is for a consideration not wholly or partly consisting of money, be such amount in money as, with the addition of service tax charged, is equivalent to the consideration;

    (iii) in a case where the provision of service is for a consideration which is not ascertainable, be the amount as may be determined in the prescribed manner.

    (2) Where the gross amount charged by a service provider, for the service provided or to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged.

    (3) The gross amount charged for the taxable service shall include any amount received towards the taxable service before, during or after provision of such service.

    (4) Subject to the provisions of sub-sections (1), (2) and (3), the value shall be determined in such manner as may be prescribed.

    Explanation. - For the purposes of this section.-

    (a) "consideration" includes any amount that is payable for the taxable services provided or to be provided;

    (b) "money" includes any currency, cheque, promissory note, letter of credit, draft, pay order, travellers cheque, money order, postal remittance and other similar instruments but does not include currency that is held for its numismatic value;

    (c) "gross amount charged" 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 transaction of taxable service is with any associated enterprise."

  4. Exemption Notifications:

    1. Notification No. 12/2003-S.T., dated 26-6-2003, issued by the Central Government, exercising powers under Section 93(1) of the Act exempted the value of...

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