2011 (1) TMI 870 - AT - Service Tax

Clearing & Forwarding (C & F) Agents - whether the amounts charged by the appellants other than service charges can be considered as actual expenses incurred and reimbursable - Held that appellant has not produced any evidence before us nor before the lower authorities. Since the claim of the learned Chartered Accountant is that they will be able to produce the evidence that the amounts which were not included in the gross amounts for discharge of service tax were reimbursed amount, we are of the view that a chance should be given to the assessee to substantiate the same by evidence before the lower authorities - Appeals are allowed

Summary

Issues:
1. Valuation of taxable service for Clearing & Forwarding (C & F) Agents.
2. Inclusion of various charges in the gross amounts for service tax liability.
3. Interpretation of Section 67(3) of the Finance Act, 1994 regarding valuation of taxable service.

Analysis:
Issue 1: The main issue in this case pertains to the valuation of taxable service for Clearing & Forwarding (C & F) Agents. The appellants had taken service tax registration and discharged service tax liability based on the service charges received from their clients. However, it was found during investigation that the appellants had not included various charges like transportation charges, rent, telephone charges, etc., in the value of the taxable service. The lower authorities confirmed the demand, imposed penalties, and sought interest. The Commissioner (Appeals) upheld the decision. The argument presented by the appellants was that the amounts charged were actual reimbursement of expenses incurred for loading, unloading, and other fixed charges as per agreements with clients.

Issue 2: Another crucial issue was the inclusion of various charges in the gross amounts for service tax liability. The Revenue argued that as per Section 67(3) of the Finance Act, 1994, the gross amounts charged for taxable service should include amounts charged towards taxable service before or after the provision of services. The Revenue contended that the appellants had not provided evidence to prove that the additional charges were actual expenses incurred and reimbursable. The appellants, on the other hand, relied on previous decisions to support their claim that the expenses were reimbursable and not part of the taxable service value.

Issue 3: The interpretation of Section 67(3) of the Finance Act, 1994 was also a key issue. The Tribunal considered whether the amounts charged by the appellants, apart from service charges, could be considered as actual expenses incurred and reimbursable. The Tribunal noted that the appellants had not produced evidence before them or the lower authorities to substantiate their claim. The Tribunal decided to give the appellants an opportunity to provide evidence regarding the nature of expenses and the actual reimbursed costs before the lower authorities.

The Tribunal, without expressing any opinion on the merits of the case, set aside the impugned order and remanded the matter to the adjudicating authority for reconsideration. The Tribunal emphasized that the adjudicating authority must follow the principles of natural justice before arriving at a conclusion. Therefore, the appeals were allowed by way of remand to the adjudicating authority for further examination and decision.