2012 (8) TMI 652 - AT - Service Tax

Valuation under service tax - reimbursement of expenses - clearing and forwarding service Held that - Service becomes complete and delivery thereof becomes possible only by incurring such expenses and therefore, such expenses form part of taxable value of service - order passed by appellate authority lacks in appreciating material facts - appeal is remanded for passing a speaking and reasoned order

Summary

Issues:
1. Whether expenses indispensable to provide a clearing and forwarding service should be added to the value of service for taxation.
2. Whether the order passed by the learned appellate authority lacked in appreciating material facts.
3. Whether the guidelines provided by the Hon'ble Supreme Court regarding writing judgments were followed in this case.

Analysis:
1. The appeal before the Appellate Tribunal CESTAT, New Delhi involved a challenge by the Revenue against the decision of the learned First Appellate Authority regarding the taxation of expenses essential for providing clearing and forwarding services. The Revenue contended that such expenses should be included in the taxable value of the service as the service's completion and delivery are only possible by incurring these expenses. The Tribunal referred to a previous judgment in C.C.E., Chandigarh v. M/s. Team S&S, emphasizing that expenses forming an integral part of service provision should be considered for taxation. The Tribunal found the order of the appellate authority lacking in appreciating material facts and thus decided to remand the appeal for a reasoned order based on the law laid down in the aforementioned judgment.

2. The Tribunal noted the absence of the other party and criticized the appellate authority for failing to appreciate material facts in the case. It highlighted the importance of stating points for decision, providing reasons, and ensuring a maintainable order as per statutory requirements. The Tribunal stressed that justice can only be served when material facts are properly recorded, examined, and the law is applied correctly. Citing the judgment in Joint Commissioner of Income-tax, Surat v. Saheli Leasing & Industries Ltd., the Tribunal emphasized the need for the appellate authority to follow guidelines on writing judgments and granting a fair opportunity of hearing to the respondent. The Tribunal ultimately remanded the appeal for a speaking and reasoned order to be passed promptly.

3. In addressing the issue of following guidelines for writing judgments, the Tribunal referenced the guidance provided by the Hon'ble Supreme Court in the case of Joint Commissioner of Income-tax, Surat v. Saheli Leasing & Industries Ltd. The Tribunal highlighted the importance of the appellate authority taking note of these guidelines, as well as the judgment in C.C.E., Chandigarh v. M/s. Team S&S. By emphasizing the need for a fair hearing and a well-reasoned order, the Tribunal directed the appellate authority to adhere to the principles outlined by the Supreme Court for delivering a just decision. The appeal was remanded for the appellate authority to pass a speaking and reasoned order promptly, in accordance with the law and the guidelines provided.