Service Tax - VCES declaration, calculation error, short payment of tax - Revenue in appeal against impugned order accepting the VCES declaration filed by the respondent-assessee – On scrutiny of the declaration made by assessee under VCES, the revenue took a view that the VCES declaration is substantially false declaration - respondent has discharged service tax liability under VCES after availing ‘Composition Scheme’ applicable to works contract – cross objections by the assessee against demand of service and interest relating to free of cost material supplied to the respondent-assessee by the Principal, in execution of works contract – HELD - the calculation of tax short paid, as made in the impugned order, is not due to any mis-declaration or false declaration under VCES - Ld. Commissioner has categorically observed that difference in tax liability is mainly due to interpretation and change in calculation of service tax, therefore, the mistake of the respondent/assessee in the declaration is bona fide and there is no malafide on their part - in view of the decision of the Larger Bench in the case of Bhayana Builders, the respondent is not required to pay service tax on the receipt of materials supplied free of cost, received from the principal. Thus, the amount demanded in the impugned order is set aside. Hence, the respondent is only required to pay the differential duty - penalty under Section 78 is also set aside, there being no case of falsification or contumacious conduct and late fee under Rule 7C is reduced - the appeal of the Revenue is dismissed and the cross objections by the respondent-assessee are allowed

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