2011 (5) TMI 100 - AT - Service Tax

Waiver of predeposit - exclusions - Reimbursement expenses -CHA services - As per the Circular No. 119/13/2009-ST dated 21.12.2009, reimbursement expenses have been excluded whenever the assessee was able to satisfy the conditions set out in para 6 of the circular - Hence, set aside the impugned order and remit the case for fresh decision to the jurisdictional Commissioner, in the light of circular dated 21.12.2009 - The appeals are allowed by way of remand.

Summary

Issues:
- Inclusion of reimbursement expenses in taxable value for levy of service tax by CHA.
- Conditions required to be satisfied for exclusions to reimbursement expenses from taxable value of CHA services.

Analysis:
1. Inclusion of Reimbursement Expenses in Taxable Value: The judgment dealt with the issue of confirming a demand by including reimbursement expenses in the taxable value for the levy of service tax by a Customs House Agent (CHA). The counsel for the assessees referred to Circular No. 119/13/2009-ST, which clarified the circumstances under which reimbursement charges are excluded from the taxable value of CHA services. The argument was supported by a specific case where reimbursement expenses were excluded based on meeting certain conditions outlined in the circular. The request was made to set aside the impugned order and remit the matter for a fresh decision in line with the circular.

2. Conditions for Exclusion of Reimbursement Expenses: The judgment highlighted the conditions that need to be fulfilled for exclusions to be made regarding reimbursement expenses from the taxable value of CHA services. These conditions included the additional nature of the activity/service, authorization between the customer and CHA, no personal benefit to CHA, recovery of reimbursements on an actual basis without mark-up, providing evidence to establish nexus between services and reimbursable amounts, separate invoicing for activities/services, and inclusion of miscellaneous expenses in the taxable value. The judgment emphasized the need for satisfying these conditions before excluding reimbursement charges.

3. Decision and Remand: Considering the submissions and the clarificatory nature of the circular, the impugned order was set aside, and the case was remitted for a fresh decision to the jurisdictional Commissioner. It was directed that new orders should be passed after granting a reasonable opportunity for the assessees to present their defense. The appeals were allowed by way of remand, indicating a favorable outcome for the assessees in terms of reconsideration based on the circular's provisions.

In conclusion, the judgment focused on the correct application of conditions for excluding reimbursement expenses from the taxable value of CHA services, emphasizing compliance with the circular's guidelines and providing the assessees with an opportunity to satisfy the specified criteria for a fair decision.