No Service Tax on Value of Materials Supplied Free
In a ruling in favor of the construction industry, a court of two judges of the Supreme Court, on the last day held that the service tax can not be imposed on the value of goods/materials supplied without cost by a recipient of the service during the building.
The advisors in the present case are covered by Section 65 (25b) of the Finance Law as they are providing ‘construction or industrial construction services‘, which is a service subject to tax under the provisions of Section 65 (105 ) (zzq) of the Finance Law.
The only question before the Court was whether the value of the goods/materials supplied or provided without cost by a recipient of the service and used to provide the service subject to taxes of the construction or industrial complex, should be included in the calculation of the gross amount ( charged by the service provider), for the valuation of the service subject to taxes, under article 67 of the Law and to make use of the benefits under Notification No. 15/2004-ST dated September 10, 2004
Previous Notice exempted
The previous Notice exempted the value of the goods and materials sold by a service provider to a recipient of the applicable tax service therein, subject to documentary evidence that specifically indicates the value of said goods and materials.
Different banks of the Court of Appeals for Taxes on Customs, Excise, and Services (to abbreviate ‘CESTAT’) had expressed contradictory views on the aforementioned issue. The income maintained that the payment received in “any form” and “any amount credited or debited, as the case may be …” must be included for the purpose of arriving at the charges for the gross amount and is applicable to pay the tax of service.
A court formed by Justices AK Sikri and Ashok Bhushan noted that a simple reading of Explanation (c) that makes “gross charges” include certain other payments would make it clear that the purpose is to include other modes of payments, in whatever form received; either through check, credit card, deduction of the account, etc.
“It is in that tone, the provisions mention that you must also include any form of payment for issue of credit or debit notes and book adjustment, therefore, the words” in any form of payment “are by issuing notes Credit or debit notes and book adjustment With the provision of free goods/materials by the recipient of the service, it is not mentioned that credit or debit notes were issued or that adjustments were made to the book.
The words “any amount paid or owed, as the case may be” to any account, whether called a “temporary account or by any other name, in the accounting books of a person subject to the service tax” would not include the value of In fact, this last portion is related to the debit or credit of the account of an associated company and, therefore, deals with the amounts received by the associated company for the services provided by the service provider “.
Will be collected with respect to the ‘taxable services’ and with the purpose of reaching 33% of the gross amount collected, unless the value of some goods/materials is specifically included by the Legislature, which cannot be added, “he added. Bank.
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