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Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
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PJ/Case Laws/2012-13/1459

Whether abatement under Notification No. 15/2004 provides for inclusions of the value of materials supplied free of cost in the assessable value?

Case:-M/S NEW CONSOLIDATED CONSTRUCTION CO LTD V/S COMMISSIONER OF SERVICE TAX, MUMBAI
 
Citation:- 2013-TIOL-283-CESTAT-MUM

Brief Facts: - The appeal and stay application was filed against the Order-in-Original No.47/ST/SB/2011-12 dated 31.7.2012 passed by the Commissioner of Service Tax, Mumbai wherein a demand of Rs.1,82,09,723/- has been confirmed against he appellant along with interest and penalties by denying the benefit of abatement under Notification No. 15/2004-ST dated 10.09.2004 as amended and Notification No. 1/2006-ST dated 1.3.2006.

Appellant’s Contention: - The appellant contended that the very same issue came before the Hon'ble High Court of Madras in the case of Larsen & Toubro Ltd., Chennai in Writ Petition No. 12691/2007 decided on 5.4.2007 reported in = (2007-TIOL-176-HC-MAD-ST) and an interim stay has been granted. The Hon'ble High Court was of the view that the explanation would be only prospective in the context of Notification No. 1/2006 dated 1.3.2006 which succeeded the Notification No. 15/2004. Following the said decision, the Hon'ble High Court of Delhi in the case of Era Infra Engineering Ltd. reported in = (2008-TIOL-386-HC-DEL-ST) took the same view and directed that while the adjudicating authority shall be at liberty to proceed with adjudication proceedings but they will not include for the purposes of determining the taxable service the supply of free material to the petitioner and to this extent the Explanation appearing against Serial No. 7 in the table given in the Notification dated 1.3.2006 will not be applied to their detriment. He further submits that in view of the prima facie view taken by two High Courts, the Tribunal is bound to follow these decisions at the interim stage.

Respondent’s Contention: - The respondent reiterated the findings of the adjudicating authority.  
 
Reasoning of Judgment: - The Hon’ble Tribunal held that in the case of Larsen & Toubro Ltd. (supra) and Era Infra Engineering Ltd. (supra), the same issue came up for consideration before the Hon'ble High Courts of Madras and Delhi and both the High Courts took a prima facie view that "insistence of inclusion of value of goods supplied and provided free by the client of an assessee cannot be included for the purposes of calculating taxable service." Respectfully following these decisions, they grant waiver of pre-deposit of the dues adjudged against the appellant and stay recovery thereof during pendency of the appeal.
 
Decision: - Stay granted.

Comment:-In view of the decisions given by the two High Courts, it was held that value of goods supplied free of cost by client cannot be included in the assessable value.

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