In Brief
The Supreme Court dismissed appeals by the Revenue challenging the valuation of service tax on construction services. The core issue was whether the value of materials supplied free of cost by clients should be included in calculating the 'gross amount charged' for service tax purposes under Section 67 of the Finance Act, 1994. The Court held that service tax is payable only on amounts actually charged by the service provider to the service recipient. Free materials supplied by the client cannot be included because they are not 'charged' by the service provider, lack nexus with the taxable service itself, and the Legislature has not specifically mandated their inclusion. The Court upheld the Full Bench CESTAT decision favouring assessees, confirming that the 33% abatement under the 2004-2005 Notifications applies only to the actual contract value."}
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