2017 (2) TMI 1485 - AT - Service Tax

Non-payment of service tax - C F Agency service - Reimbursement expenses - certain portion of consideration received from the client - HELD THAT - On careful perusal of the terms of agreement and the supporting documents submitted by the appellant alongwith the relied upon case laws it is clear that the appellant shall not be liable to service tax on the amount claimed by them from their clients towards reimbursable expenditure with reference to arranging transport of cement to customers from their storage premises. This is in terms of their agreement with the client and the amounts are on actual basis. The transport documents nowhere indicates the name of the appellant. As such based on the decided cases referred to above by the appellant, it is clear that such amounts are not to be included in the assessable value to determine the tax liability under C F Agency service. Wherever the amounts are reimbursed on actual basis in terms of contractual agreement as supported by documentary evidence, the same is not liable to be added in the taxable value. The amount liable for exclusion are to be verified and satisfied by the jurisdictional officers - Appeal allowed by way of remand.

Summary

Issues:
Dispute over non-payment of service tax on certain portion of consideration received from the client by a Clearing and Forwarding Agency.

Analysis:
The appeal challenged the order of the Commissioner (Appeals - I), Indore, regarding the liability to pay service tax on the full gross amount received from clients for C&F Agency work. The Tribunal previously dismissed the appeal, but the High Court set aside the order for fresh consideration on merit.

The appellant contended that expenses incurred on behalf of clients were fully reimbursed based on contractual understanding and supported by documentary evidence. They argued that arranging transport and getting reimbursed on an actual basis should not be taxed under C&F Agency service. The appellant cited relevant case laws and High Court judgments to support their claim.

The Authorized Representative reiterated the findings of the impugned order, emphasizing the need to ascertain the exact quantum of reimbursable expenditure excluded from the assessable value by the Jurisdictional officer.

After hearing both parties and examining the agreement terms and supporting documents, the Tribunal concluded that the appellant was not liable to pay service tax on the reimbursable expenditure for arranging transport based on the contractual agreement. The Tribunal referenced previous cases and held that such amounts should not be included in the assessable value for tax calculation. The Tribunal noted that the appellant was compliant with service tax on other charges and commissions. The decision allowed the appeal and directed verification of the excluded amount by jurisdictional officers.

In conclusion, the Tribunal allowed the appeal, ruling in favor of the appellant based on the contractual agreement and documentary evidence supporting the exclusion of reimbursable expenditure from the taxable value. The decision emphasized the importance of verifying excluded amounts by jurisdictional officers.