2008 (10) TMI 70 - AT - Service Tax

Whether reimbursed amounts are exigible to service tax - held that as far as C & F agency is concerned, the commission received for the services rendered only will be exigible to service tax. In other words, if certain amounts are spent by the C & F agent on behalf of the Principal and later they are reimbursed then such amount would not be liable for service tax

Summary

Issues:
Service tax liability for C & F agents' services from 1999 to 2004.

Analysis:
The appeal was filed against the Order-in-Appeal by the Commissioner of Customs & Central Excise (Appeals), Cochin. The appellants, acting as C & F agents for a company, were accused of not paying service tax from 1999 to 2004. A show cause notice was issued demanding service tax, interest, and penalties. The lower authority confirmed the demand, and a penalty was imposed under Section 78 of the Finance Act. The appellants approached the Commissioner (Appeals), who upheld the lower authority's decision, leading to the appeal before the Tribunal.

The appellants argued that they were consignment agents for the company and received remuneration for services rendered as C & F agents. They also incurred various expenses on behalf of the company, which were reimbursed by the company. The appellants received a commission and reimbursement for expenses like outstation booking charges, loading and unloading charges, telephone/fax/courier/postage, stationery, electricity charges, and local delivery charges. They contended that the reimbursed amounts were not liable for service tax as they were only incidental to the C & F agency activities.

After careful consideration, the Tribunal held that only the commission received for services rendered by the C & F agent would be liable for service tax. Amounts spent by the agent on behalf of the Principal and later reimbursed would not be subject to service tax. Citing previous cases, the Tribunal concluded that all reimbursed amounts were not exigible to service tax. Therefore, the appeal was allowed, and the impugned order was set aside, providing consequential relief to the appellants.

This judgment clarifies the tax liability of C & F agents for services rendered and reimbursed expenses. It emphasizes that only the commission received for services is taxable, while reimbursed amounts are not subject to service tax. The decision aligns with previous rulings and provides relief to the appellants in this case.