Following bhayana builders’ free supply of materials by the service recipient is not includible in the gross value of taxable services. Interest is not chargeable when CENVET credit is reversed before utilization.

Gurmehar construction vs. commissioner of central excise, Raipur [2014] 36 STR 545(Tri. - Del.)

 

Facts:

The appellant received free supply of diesel from the services recipient for rendering services. The department included the value of free suppliers 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 utilization.

Held:

Tribunal relying on the decision of the larger bench in the case of bhayana builders’ pvt. Ltd. Vs. commissioner services 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 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 payments of any tax as and when it is due and payable “ the tribunal held that interest is not chargeable when CENVET credit was Reversed without utilization.

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 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.