Inexorable Pathology?
THE President noted that there are many appeals pending in CESTAT where adjudicating authorities had interpreted Section 67 as enjoining the total consideration received under composite transactions by a service provider to be the taxable value and have rejected claims for exclusion of the value of accretion sale of goods.
This, he calls as the inexorable pathology which results on accommodating a minimalistic legislative/statutory framework administered by and under a maximized executive discretion albeit of the quasi judicial variety.
Notification No. 12/2013, exempted the value of goods and materials sold. This, the President says proves that the Central Government was clearly of the view that the value of goods and materials sold by a service provider to the recipient of service during the course of provision of a taxable service is included in the taxable value under Section 67. It would be incredulous to assume that pure sale transactions were sought to be excluded by these exemption notifications, since a transaction of sale of goods simplicitor (whether intra-State or inter-State) is always (even prior to the 46th Amendment), beyond the legislative scope of the Union's residuary legislative powers.
This is perhaps the inevitable consequence of relegating constitutional limits on legislative powers problematics to discretionary executive curatives. Precedents caution against such interpretive extravagances;
If revenue's contention was correct, insertion of Works Contract Service in Finance Act, 1994 would have been unnecessary:
The learned Technical Members, who differed with him, did not elaborate on these points.