2013 (1) TMI 740 - AT - Service Tax

Clearing and Forwarding Agent Service - Held that - Impugned demand of service tax is on these expenses, which were incurred by the appellant, while rendering CFA service. The learned consultant for the appellant has referred to Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006 and has submitted that this provision has been struck down by the Hon ble High Court vide Intercontinental Consultants and Technocrats Pvt. Ltd. Vs Union of India and Another reported in 2012 (12) TMI 150 - DELHI HIGH COURT - we grant waiver of pre-deposit and stay of recovery in the wake of the relevant rule having been struck down by the Hon ble Delhi High Court. Prima facie, therefore, the reimbursable expenses were not liable to be included in the taxable value for payment of service tax on CFA service. Accordingly, there will be waiver of pre-deposit and stay of recovery in respect of the adjudged dues - Stay granted.

Summary

Issues:
1. Taxability of reimbursable expenses in service tax valuation for Clearing and Forwarding Agents (CFA).

Analysis:
The judgment by the Appellate Tribunal CESTAT Chennai dealt with the issue of taxability of reimbursable expenses in the valuation of service tax for Clearing and Forwarding Agents (CFA). The appellant, a CFA, was paying service tax without including expenses like courier charges, Xerox charges, and freight charges in the taxable value. The appellant contended that Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006, which required inclusion of such expenses, had been struck down by the Hon'ble High Court in a specific case. The Tribunal considered the arguments presented by both sides and found a prima facie case for the appellant.

Upon reviewing the submissions, the Tribunal granted waiver of pre-deposit and stay of recovery based on the ruling that the relevant rule had been struck down by the Hon'ble Delhi High Court. The Tribunal held that, prima facie, the reimbursable expenses were not liable to be included in the taxable value for payment of service tax on CFA service. Consequently, the Tribunal ordered a waiver of pre-deposit and stay of recovery concerning the adjudged dues. The judgment clarified the treatment of reimbursable expenses in service tax valuation for CFAs, providing relief to the appellant based on the legal precedent set by the High Court's decision.