2017 (11) TMI 1396 - AT - Service Tax

Principles of natural justice - Service Tax on the reimbursement/payments received from the clients - pure agent - Held that - the Ld. Commissioner (Appeals) has not dealt with all the issues raised by the appellants and has given no finding on various contentions raised by the appellants - The agreements submitted by the appellants in support of their contentions also do not appear to have been examined by the Ld. Commissioner (Appeals). There is no finding also on the appellant s contentions that they are receiving advances at the rate of 10% of their provisional fees for incurring the expenses and the reimbursement expenditure is not fixed at the rate of 10% of their fees and that they receiving the expenses on the actual basis only. Considering that significant contentions made by the appellants in their submissions before the Ld. Commissioner (Appeals) have not been dealt at all by the first appellate authority, the matter needs to be re-examined by the Ld. Commissioner (Appeals) again - appeal allwoed by way of remand.

Summary

Issues: Appeal against order confirming Service Tax demand on reimbursable expenses.

Analysis:
1. Facts of the Case: The appellants, a Manpower Recruitment & Supply Agency, were audited for FY 2005-2008, revealing unreimbursed Service Tax on expenses reimbursed by clients. A show cause notice led to a demand of &8377;18,03,065/- with penalties.

2. Appellant's Contentions: The appellants claimed to act as a 'Pure Agent' for clients, contending they are not liable for Service Tax on reimbursable expenditures. They argued that the Ld. Commissioner (Appeals) ignored their submissions and agreements with clients, citing relevant case laws in support.

3. Revenue's Response: The Ld. AR for the Revenue supported the findings of the Ld. Commissioner (Appeals) regarding the demand upheld.

4. Tribunal's Findings: The Tribunal noted that the Ld. Commissioner (Appeals) did not address all issues raised by the appellants, including the nature of the Pure Agent relationship and the actual basis of reimbursement. The agreements submitted by the appellants were not examined, and no findings were given on various contentions.

5. Decision: Due to the Ld. Commissioner (Appeals) failing to address crucial contentions, the matter was remanded for re-examination. The Ld. Commissioner (Appeals) was instructed to review all submissions, ledger, and agreements, providing specific findings and ensuring the appellants have a fair opportunity to present their case.

6. Conclusion: The appeal was disposed of by way of remand, emphasizing the need for a thorough re-examination of the issues and a fresh order by the Ld. Commissioner (Appeals).