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June 2014

2014 (34) STR 47 (Tri-Del.) CCE, Bhopal vs. Sonali India

By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
Reading Time 1 mins
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Whether free material supplied by service receiver needs to be included in the value of taxable services provided by the service provider? Held no.

Facts:
Respondent entered into contract with IOCL for erection of tanks and pumps. The tanks and pumps were supplied by IOCL. Respondent supplied other materials and rendered erection service. Respondent discharged service tax liability after claiming the abatement of 67% on the gross amount charged under Notification No. 1/2006 dated: 01-03-2006. The dispute was while allowing the abatement of 67% whether the value of tanks and pumps were to be included in the taxable value.

Held:
Rejecting Revenue’s appeal held that, the gross amount charged by the service provider need to include the value of plant, machinery, equipment, parts etc., only when the same were sold by the service provider in the course of providing the service. Since nowhere it was alleged that the tanks and pumps were sold by the Respondent. In the course of rendering the service appeals filed by the Appellant (revenue) was dismissed.

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