2017 (6) TMI 684 - AT - Service Tax

Valuation - Surplus & Incidental Income - includibility - Held that - It is argued that the said issues have been settled in the case of Commissioner of Service Tax Versus M/s. Sangamitra Services Agency 2013 (7) TMI 862 - MADRAS HIGH COURT , where it was held that it is difficult to hold that the gross amount of remuneration/commission would nevertheless include expenditure incurred by the assessee providing the services; that all incidental charges for running of the business would also form part of the remuneration or Commission - appeal allowed - decided in favor of appellant.

Summary

Issues:
Short payment of service tax by Custom House Agents for the period 2004-05 and 2005-06 due to non-inclusion of receipts/income under certain heads; confirmation of demands by original authority along with penalties under Section 76, 77 of the Finance Act, 1994; whether reimbursable charges in respect of surplus & incidental income should be included in the gross value of taxable services.

Analysis:

1. The appellants, Custom House Agents, were found to have not included receipts/income accounted under certain heads, resulting in short payment of service tax for the period 2004-05 and 2005-06. Show Cause Notices were issued, and the original authority confirmed the demands along with penalties. The appeals were filed before the Commissioner (Appeals) who upheld the decision, leading to the current appeals before the Tribunal.

2. The appellant's counsel argued that the issues revolve around whether reimbursable charges in respect of surplus & incidental income should be included in the gross value of taxable services. Referring to previous judgments, the counsel contended that these issues have been settled in specific cases and requested the appeals to be allowed based on those precedents.

3. The respondent reiterated the findings in the impugned order and highlighted that the department has filed an appeal before the Hon'ble Supreme Court against a relevant judgment, which has been admitted.

4. The Tribunal noted the submissions from both sides and proceeded with the analysis.

5. The Tribunal acknowledged a previous order in the appellant's own case where the matter was remanded due to pending decisions at higher courts. However, considering the absence of a stay granted by the Hon'ble Supreme Court regarding a specific judgment, the Tribunal found the demand unsustainable based on the judgments of the Hon'ble Delhi High Court and the jurisdictional High Court in a similar case. The Tribunal referred to a relevant portion of the judgment to support its decision.

6. Based on the discussions and the ratio laid down in the cited High Court judgments, the impugned order was set aside, and the appeals were allowed with consequential relief, if any.