The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the cost of material supplied free by the service recipient was includible in the gross value of works contract service.
Kirti Infrastructures Ltd, the appellant assessee was providing the service of construction of a new building or a civil structure or a part thereof as its turnkey project of construction.
The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the demand of service tax classified the service of the assessee under the category of ‘Commercial or Industrial Construction Service’.
Nilesh Suchak, the counsel for the assessee contended that the free supply of material by the service recipient for execution of the works contract can be included in the gross value of works.
Further submitted that the assessee was a bonafide intention and there was no suppression of facts on the part of the assessee and also the assessee had filed the value added tax reports before the department.
Prakash Kumar Singh, the counsel for the department relied on the decisions made by the lower authorities and contended that the service provided by the assessee was not in the category of works contract service, it was under the category of commercial service.
The Bench observed that the cost of material supplied free by the service recipient is includible in the gross value of the works contract service.
The two-member bench comprising Ramesh Nair (Judicial) and C.L Mahar (Technical) held the demand raised was only under the category of commercial service which was not sustainable and held that the cost of material supplied free by the service recipient was includible in the gross value of works contract service.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
