Case Law Details
Smp Constructions Pvt Ltd Vs C.C.E. & S.T (CESTAT Ahmedabad)
Introduction: In a significant ruling by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Ahmedabad, it has been established that the cost of material provided by the service recipient must be included in the gross value of construction service for availing abatement under Notification No. 01/2006-ST. The ruling was made in the case of Smp Constructions Pvt Ltd Vs C.C.E. & S.T.
Analysis: The key issue in this case revolved around whether the value of the material supplied for free by the service recipient should be added to the gross value of the construction service for the purpose of availing abatement under the service tax. The tribunal decided in favor of the appellant, following precedents set in their own previous case as well as the larger bench decision upheld by the Supreme Court in the case of M/S Bhayana Builders Pvt. Ltd. This verdict emphasizes the importance of considering the value of free supply materials in the gross value of a service, thereby ensuring the right application of abatement under service tax.
Conclusion: The CESTAT Ahmedabad’s decision reaffirms the need to consider all aspects of service value, including materials supplied free of cost by the service recipient, for the application of tax abatement.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The issue involved in the present case is that for availing the abatement under Notification No. 01/2006-ST dated 01.03.2006 whether cost of the material provided by the service recipient required to be included in the gross value of construction service.
2. Shri Vinay Kansara, Learned counsel at the outset submits that the issue is no longer res integra as this tribunal in the appellant’s own case vide final order no A/12818-12819/2018 dated 26.11.2018 decided in favour of the appellant. Therefore, the appeal to be allowed
3. Shri Vijay G, Iyengar, Learned assistance commissioner (AR) appearing on behalf of the Revenue reiterates the finding of the Impugned order.
4. We have considered the submission made by both side and perused the records. We find that the issue is no longer res-integra as the same has been settled in favour of the appellant as per the Hon’ble supreme court judgment in the case M/S Bhayana Builders Pvt. Ltd reported at 2018 (10) GSTL 118 (SC) whereby the larger bench decision of this Tribunal was upheld by dismissing the Revenue’s appeal. This Tribunal in the appellant’s own case vide order dated 26.11.2018 passed the order in their favour which is reproduced below:-
“4. We have carefully considered the submission made by both the sides and the sides and perused the records, we find that the whole dispute arisen due to the explanation given in the notification No. 15/2004 as well as Notification No. 01/2006-ST that whether the value of free supply material need to be added in the gross value of commercial or Industrial Construction service for the purpose of allowing the said exemption. The issue has been dealt with by the Larger Bench of this Tribunal in M/S Bhanya Builders Pvt .LTD (Supra) wherein it was held that the value of free supply material need to be added. On the interpretation of explanation given in notification No. 15/2004 as well as Notification No. 01/2006-ST, the judgement of M/s Bhayana Builders the ratio of the judgement of M/s Bhayana Builders Pvt. LTD (supra), the demand is not sustainable. Impugned orders are set aside. Appeals are allowed.”
In view of above settled position the impugned order is not sustainable hence, the same is set aside. Appeal is allowed
(Pronounced in the open court on 21.06.2023)
