By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
fiogf49gjkf0d
Following Bhayana Builders free supply of material by the service recipient is not includible in the gross value of taxable service. Interest is not chargeable when CENVAT Credit is reversed before utilisation.
Facts: The Appellant received free supply of diesel from the service recipient for rendering taxable service. The department included the value of free supplies in the assessable value u/s. 67 of the Finance Act. Further interest was demanded on wrong availment of CENVAT Credit which was reversed without utilisation.
Held:
Tribunal relying on the decision of the larger bench in the case of Bhayana Builders Pvt. Ltd. vs. Commissioner, Service Tax, held value of free supplies is not includible in the gross amount charged. Relying on the decision of Karnataka High Court in the case of Bill Forge Pvt. Ltd 2012 (26) S.T.R. 204 (Kar), where the Court taking due note of the judgment of the Supreme Court in the case of Ind-Swift Laboratories Ltd. 2012(25) S.T.R. 184 (S.C.) concluded “that Interest is compensatory in character and is imposed on an assessee who has withheld payment of any tax as and when it is due and payable” the Tribunal held that interest is not chargeable when CENVAT Credit was reversed without utilisation.
Note: It was noted by the Tribunal, the decision of the CESTAT, Mumbai in the case of Balmer Lawrie & Co. Ltd 2014 (301) E.L.T. 573 (Tri.) distinguishing the decision of the Karnataka High Court that when a judgment is sought to be distinguished, the difference in the facts should be such so as to have a material effect on the findings contained in the judgment. The Bench further stated that they are legally bound by the decision of the Karnataka High Court in absence of any judgment to the contrary of any other Court equivalent or superior to it.
