2017 (12) TMI 166 - AT - Service Tax

Valuation - includibility - reimbursable expenditure incurred during the course of their activity as C&F agent like godown rent, loading and unloading, security charges, electricity, cartage, stationery and printing, telephone, fax charges, photocopy expenses, repacking charges, travelling charges, internet charges etc - Held that - reimbursable expenditure, as established by supporting documentary evidences, are not to be included for taxable purposes. This requires verifications of fact by the original authority - reliance placed in the case of M/s. Rajshree Enterprises Versus C.C.E., Jaipur-I 2017 (4) TMI 39 - CESTAT NEW DELHI , where the judgment in the case of Sri Sastha Agencies Pvt Ltd., Vs. Asst. Commissioner 2006(11)TMI 193- CESTAT, BANGALORE , relied upon, wherein it is held that no element other than remuneration received by a Clearing & Forwarding agent from their principal was to be included in the taxable value of the service. Matter remanded to the original authority to examine the supporting evidence with reference to all the contracts entered into by the appellants during the course of their service as C&F agents - appeal allowed by way of remand.

Summary

Issues:
Dispute over non-inclusion of certain considerations in taxable value for service tax payment under C&F agency service. Confirmation of service tax liability and imposition of penalties under Sections 77 and 78 of the Finance Act, 1994.

Analysis:
The case involved a dispute concerning the inclusion of various expenses incurred by the appellants in the taxable value for service tax payment under C&F agency service. The appellants argued that expenses like godown rent, loading and unloading charges, security fees, and other similar costs were actual expenses to be reimbursed by clients and should not be considered for tax calculation. The Revenue, however, contended that all considerations received for taxable services must be included in the value as per Section 67 of the Finance Act, 1994.

The original authority upheld a differential service tax liability of ?16,37,379 and imposed penalties under Sections 77 and 78 of the Finance Act, 1994. The appellant's counsel cited agreements with clients outlining responsibilities and reimbursement of expenses, relying on a precedent in Rajshree Enterprises Vs. CCE, Jaipur-I. The Revenue's representative argued that the nature of reimbursement required verification due to multiple contracts with different clients.

After hearing both sides and reviewing the records, the Tribunal noted that the core issue revolved around the appellant's expenses as a C&F agent, claimed to be reimbursed by clients. Citing precedents and legal positions, the Tribunal emphasized that reimbursable expenses, supported by documentary evidence, should not be included for taxable purposes. Consequently, the matter was remanded to the original authority for a fresh examination, providing the appellant with an opportunity to present their defense adequately. The impugned order was set aside, and the appeal was allowed by way of remand.