2013 (8) TMI 170 - AT - Service Tax

Valuation - gross value - reimbursement of expenses, liable to service tax - Expenses incurred by the appellants on behalf of I.B.P/IOC like Tea/Coffee/Consumable salary of employees, handling losses generator set expenditure, Bank Charges, Electricity Charges, are reimbursed by the I.B.P/IOC Held that - As per Section 67 of the Act, value of any taxable service shall be gross amount charged by the service provider for such service provided or to be provided. It does not provide for any deduction from the gross value for providing the service - Contention of the appellants that no service tax is payable on reimbursable expenses borne by the appellants is not tenable and accordingly rejected Decided against the Assessee. Commission Agent are exempted for levy of Service Tax under Notification 13/2003 dated 20.06.2013 Held that - This exemption is applicable to Commission Agent only - On going through agreement entered into by the appellants with I.B.P/IOC, it has been seen that appellants are providing various services to the appellants and are covered under Clause (i), (iii) & (iv) of the definition of Business Auxiliary Service apart from being Commission Agent. Therefore the benefit of Notification 13/2003 has rightly been denied to appellant Decided against the Assessee. Limitation Held that - Time bar was not raised by the appellant before lower authority - Appellant did not pay service tax and did not file any return - Figures for various charges received by, was given by I.B.P/IOC and not by the appellant - Extended period is applicable to fact of this case and accordingly penalty is also imposable on the appellants Decided against the Assessee.

Summary

Issues:
Appeals challenging service tax, penalties, and interest under Business Auxiliary Service (BAS) for various appellants.

Detailed Analysis:
1. Common Issue: The appeals involved multiple appellants facing similar issues related to service tax under BAS. The department alleged that appellants provided various services falling under BAS, leading to the issuance of Show Cause Notices demanding service tax, interest, and penalties.

2. Contentions by Appellants: The appellants argued that they had already paid service tax on commissions received from the companies they worked for. They claimed that charges like Tea/Coffee expenses, salaries, handling losses, and other reimbursable expenses should not be subject to service tax as they were borne by the companies. They also contended that they qualified as Commission Agents exempted from service tax under a specific notification.

3. Department's Position: The department argued that the appellants, as Maintenance and Handling Contractors for retail outlets, not only received commissions but also provided various services on behalf of the companies, which fell under BAS. They emphasized that the appellants' efforts to increase sales constituted promotion of sales, making them ineligible for the Commission Agent exemption.

4. Judgment on Service Tax: The tribunal found that the service tax was correctly demanded from the appellants under BAS as defined in the Finance Act. The definition of Business Auxiliary Services encompassed the activities performed by the appellants, leading to the rejection of their claim for exemption.

5. Reimbursable Expenses: The tribunal held that as per Section 67 of the Act, the gross amount charged for services is taxable without deductions for expenses borne by the service provider. Therefore, the appellants were liable to pay service tax on all charges, including reimbursable expenses.

6. Commission Agent Exemption: The tribunal determined that the appellants, despite being Commission Agents, were not entitled to the exemption under Notification 13/2003 due to the range of services provided beyond mere commission-based activities.

7. Time Bar and Penalty: The tribunal noted that the plea of time limitation was not raised earlier, and as the figures were provided by the companies, the extended period was rightly invoked. Consequently, penalties were deemed applicable due to non-payment of service tax and failure to file returns.

8. Precedent: The tribunal distinguished the appellants' reliance on a Delhi High Court decision, stating that the ruling pertained to a different time period and was not applicable to the present case.

9. Verdict: Ultimately, the tribunal rejected the appeals, upholding the imposition of service tax, penalties, and interest on the appellants for their activities falling under BAS and dismissing their contentions regarding exemptions and time limitations.