2013 (10) TMI 1115 - AT - Service Tax

Valuation - inclusion of cost of reimbursement of expenses - Demand was confirmed on the ground that Applicant is liable to pay Service Tax on the gross amount received as provider of clearing and forwarding agent. - The contention of Applicant is that they are liable to pay Service Tax only on remuneration received and amount which is reimbursed by the principal are not to be taken into consideration for the purpose of levy of Service Tax as C & F Agent - Held that - In the agreement there is specific Clause that the present Applicants are not entitled for any reimbursement or any monetary benefit for the work rendered under the agreement. - Prima facie we are of the view that the decisions relied upon by the Applicants are not applicable to the facts of the present case in view of the specific Clause in the agreement. Further we find that in the monthly returns the receipt of reimbursements is not reflected by the Applicant therefore prima fade we find it is not a case for total waiver of the amount of Service Tax - Following decision of S.D.Business Enterprise Pvt. Ltd. Vs. Commr. of Service Tax, Kolkata 2009 (6) TMI 405 - CESTAT, KOLKATA - stay granted partly.

Summary

Issues:
1. Application for waiver of pre-deposit of service tax and penalty under Section 78 and other provisions of Finance Act, 1994.
2. Inclusion of re-imbursable expenses like godown rent and loading/unloading charges in the gross taxable value for clearing and forwarding agent services.

Analysis:
1. The appellant, engaged in providing clearing and forwarding agent services, sought waiver of pre-deposit of service tax and penalties totaling Rs.19,13,727 imposed for discrepancies between gross taxable value in ST-3 Returns and balance-sheet. The consultant argued that the difference pertained to re-imbursable expenses from their Principal, M/s Lafarge India Ltd., and should not be included in taxable value. Citing a Tribunal decision and financial crisis due to factory closure, the appellant requested relief.

2. The Revenue contended that expenses like godown rent and loading/unloading charges are integral to clearing and forwarding services, as per the agreement with M/s Lafarge India Ltd. Referring to Tribunal judgments in similar cases, the Revenue argued for pre-deposit. After hearing both sides, the Tribunal considered the issue of including re-imbursable expenses in taxable value. Relying on past decisions, the Tribunal directed the appellant to deposit 25% of the service tax within eight weeks, with the balance amount waived and recovery stayed during the appeal. Failure to comply would lead to dismissal of the appeal.

This judgment addresses the crucial issue of whether re-imbursable expenses should be included in the taxable value for clearing and forwarding agent services. The Tribunal balanced the financial hardship faced by the appellant with the interest of revenue, ultimately ordering a partial deposit to proceed with the appeal process. The decision underscores the importance of consistent application of legal principles and precedent while considering financial implications and fairness in tax matters.