Case Law Details
Adept Vs Principal Commissioner of CGST & Central Excise (CESTAT Allahabad)
CESTAT Allahabad held that supply of diesel in Operation & Maintenance contract, being supply of goods, is outside the purview of service tax. Accordingly, value of diesel is not includible in the assessable value of operation and maintenance service.
Facts- Appellant is a partnership firm. During the audit of the records of the Party for the F.Y. 2015-16 & 2016-17, it was observed that Appellant was engaged in Operation & Maintenance of Telecom/Mobile towers. Services provided included Diesel Filling services for M/s VIOM Networks Limited. After introduction of ‘Negative List Based Taxation of Services’ w.e.f. 01.07.2012, the said services were neither included under the negative list of Services (u/s. 66D) nor exempted under any notification. Accordingly, notice was issued and demand was confirmed.
Conclusion- The Supreme Court, therefore, held that the value of material which is supplied free by the service recipient cannot be treated as ―gross amount charged” as that is not a ―consideration” for rendering the service. In fact, in regard to free supply of diesel and explosives, the Supreme Court specifically observed that they would not warrant inclusion while arriving at the gross amount charged on the service tax to be paid.
The valuation of taxable service for charging service tax could only be the gross amount charged for providing such ―taxable services” which in the present case is the filing of diesel and any other amount cannot be a part of the valuation as it cannot be an amount for such ―taxable services.
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