2015 (7) TMI 98 - AT - Service Tax

Reimbursement of expenses - whether the appellant is liable to pay service tax on the amount reimbursed to them - Held that - During the audit of the accounts of the appellant that appellant had been reimbursed expenditure incurred during the period from April 2005 to March 2009. - reimbursable expenses received by the assessee need not be added to the taxable value relating to clearing and forwarding agency - Decision in the case of Sangamitra Services Agency 2013 (7) TMI 862 - MADRAS HIGH COURT followed - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Appeal against stay order and final order.
2. Liability to pay service tax on reimbursed expenses.

Analysis:

Issue 1: Appeal against stay order and final order
The appellant filed a stay application which was listed for hearing. The Commissioner (A) had passed a final order requiring the appellant to deposit the entire service tax confirmed plus half of the penalty imposed within 10 days. As the appellant did not comply, the final order was passed rejecting the appeal. Another appeal was filed against this final order. The Tribunal noted that an appeal against the stay order is not maintainable once a final order has been passed. The Tribunal considered the stay application infructuous and rejected it. Additionally, the Tribunal took up the appeal against the final order for consideration, even though it was not listed. The Registry failed to produce the appeal file, prompting the Tribunal to request the Deputy Registrar to ensure timely production of appeal files.

Issue 2: Liability to pay service tax on reimbursed expenses
The main issue revolved around the liability of the appellant to pay service tax on expenses reimbursed to them. The appellant had been reimbursed expenditure incurred during a specific period. The appellant argued that reimbursed expenses should not be included in the taxable value for service tax purposes, citing decisions from the Hon'ble High Courts of Delhi and Madras. These decisions held that including reimbursed expenses for service tax calculation purposes goes beyond the charging provisions and should not be upheld. The Tribunal found that the appellant had a strong prima facie case in their favor based on these decisions. Consequently, the Tribunal set aside the impugned order and remanded the matter to the Commissioner (A) to decide the appeal on merits without insisting on any pre-deposit and while observing the principles of natural justice.

In conclusion, the Tribunal rejected the stay application as infructuous due to the final order being passed, and directed the Commissioner (A) to decide the appeal on the issue of liability to pay service tax on reimbursed expenses without requiring any pre-deposit.