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Service Tax - Works Contract and Commercial or Industrial Construction service - Includability of value of reinforcement steel and cement received free of cost from client into assessable value – Demand of service tax on supply of ready mix concrete – Levy of penalty
HELD - the value of the items supplied by the customers to the service provider on FOC basis is not includable in the taxable value of the service - the appellants are justified in not including the cost of reinforcement steel and cement supplied by their clients - the confirmation of duty value of reinforcement steel and cement received free of cost is set aside – Regarding deposit service tax on supply of RMC, the absence of mala fide intention would have been manifest if the appellants discharged the tax liability before the conduct of audit - appellant have not made any case to show the absence of mala fide intention.
The demand of service tax on the items supplied by the customers of the appellants on FOC basis is set aside along with interest and penalty. As regards the issue of inclusion of value of RMC supplied by the customers to the appellants, demand is confirmed and penalty is restricted to 25% - the appeal is partly allowed.