By TIOL News Service

MUMBAI, DEC 28, 2017: THIS is a Revenue appeal challenging the order of the Commissioner (Appeals) who held that the goods supplied by the contractee is not includible in the value of the contracts executed by the appellant, for the purpose of payment of service tax.

The AR submits that against the decision of Larger Bench in the case of M/s Bhayana Builders (P) Ltd. - 2013-TIOL-1331-CESTAT-DEL-LB (which has been relied upon by the lower appellate authority), the Department has gone in appeal before the Apex Court and, therefore, the matter should be remanded back to the adjudicating authority to re-adjudicate the matter following the Apex Courts judgment in the case of M/s Bhayana Builders (P) Ltd.

The Bench, at the outset, observed that pendency of appeal of Revenue before higher Court cannot be a reason to keep the appeal pending/remanding the same.

The CESTAT further held -

"4. It does not appeal to common sense as to the reason why Finance Act, 1994 not being commodity taxation law shall tax the value of the goods supplied as above. Even if the argument of Revenue is considered that the value of material is includible, the very inclusion may be for the purpose of value of contract. But, Revenue should not tax the commodity since Finance Act, 1994 intends to tax on value of taxable service. If Revenue chooses to dispute further, it may choose recourse of remedy against order of Tribunal."

The Revenue appeal was dismissed.

(See 2017-TIOL-4559-CESTAT-MUM)