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2018 (2) TMI 22 - AT - Service TaxLiability of service tax - expenses incurred by the appellants which is claimed as reimbursable expenditure from their principal during the course of providing C&F Agents Service - Held that - actual reimbursable expenditure incurred by the C&F Agents on behalf of the principal under a contractual arrangement is not to be included in the taxable value at the hands of C&F Agents. The condition for such exclusion is that the expenditure should be on behalf of the principal and it should be as per a pre-arrangement and payment should be on actual basis only, as submitted by the department - In the present case, the appellants are pleading for fulfillment of these conditions. As such, there is no justification to include such actual reimbursable expenditure in the taxable value at the hands of the appellants. Liability of service tax - GTA Service for goods transported by the principal to the premises managed by the appellant - Held that - the freight is paid by PEIL through their agent (i.e., appellants) for transportation of such goods. In such a situation, it is PEIL, who is liable to pay the freight, is apparently liable to pay service tax. The appellants cannot be considered as a Consignor or Consignee of the goods as they are acting only as an agent in the transaction of PEIL, who are manufacturing and selling the goods. In such a situation, provisions of section 2(1)(d)(v) will not apply to the appellants in the present case. Delayed payment of service tax - short-payment of service tax with intention for evasion - Held that - There is no misrepresentation or suppression by the appellants as they have not filed any statutory return covering this period, as the same is due only in Apr. 08. Delay in payment of service tax beyond the period as mentioned in Service Tax Rules, 1994 will attract interest. In the absence of any intentional violation, penalty under section 78 on such delay alone will not be justified. If at all, a penalty under section 76 my have application, which, in any case, has not been imposed in the present case. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Liability to pay service tax on reimbursable expenses incurred by C&F Agents. 2. Liability to pay service tax under GTA Service for goods transported. 3. Delayed payment of service tax leading to short-payment with intention for evasion. Analysis: Issue 1: Liability on Reimbursable Expenses The appellants contested the tax liability on expenses reimbursed by the principal, arguing that such expenses are incurred on behalf of the principal under a pre-determined contractual arrangement. They relied on established legal principles that fully reimbursable expenditure incurred by C&F Agents should not be included in taxable value. The Tribunal referred to precedents like M/s. Amit Sales Vs Commissioner of Central Excise and M/s. Sangamitra Services Agency to support the appellants' position. The Tribunal concluded that there was no justification to include reimbursable expenses in the taxable value, overturning the original authority's decision. Issue 2: Liability under GTA Service The dispute revolved around whether the appellants, acting as C&F Agents for the principal, were liable under reverse charge for service tax on GTA services. The Tribunal noted that the appellants paid freight on behalf of the principal, which was reimbursed on an actual basis. It was clarified that the statutory scope of reverse charge applied to the person liable to pay freight, which, in this case, was the principal. The Tribunal determined that the appellants, as agents, were not 'Consignor' or 'Consignee' of the goods, and hence, were not liable to pay service tax under GTA Service. Issue 3: Delayed Payment of Service Tax Regarding the delayed payment of service tax for two months, the appellants explained that the delay was due to administrative reasons and the full amount was paid in January. The Tribunal acknowledged the delay but emphasized that it did not amount to evasion of duty. The appellants had not misrepresented or suppressed any facts, and the penalty under section 78 was deemed unjustified. The Tribunal highlighted that interest would apply for delayed payment as per the Service Tax Rules, but there was no intentional violation warranting a penalty under section 78. In conclusion, the Tribunal found the impugned order lacking merit and set it aside, allowing the appeal in favor of the appellants.
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