2018 (3) TMI 111 - AT - Service Tax

Valuation - reimbursement charges - Board Circular dated 21.12.2009 - whether the exclusion sought as reimbursable expenses from the gross received is legally correct or not? - Held that - The Tribunal in the case of International clearing & Shipping Agency Pvt. Ltd. Vs. CST, Chennai 2011 (5) TMI 100 - CESTAT, CHENNAI , has held that reimbursable expenses is not to be included in the total value of taxable services - appeal dismissed - decided against Revenue.

Summary

Issues:
Determining tax liability on reimbursable expenses in Customs House Agent service.

Analysis:
The department appealed against the Commissioner's order that set aside the demand for reimbursable expenses exclusion from the taxable value. The Commissioner confirmed a demand of &8377; 1,40,421/-, alleging service tax evasion by the respondent. The department argued that all charges incurred in providing taxable services should be included in the taxable value as per Rule 5(1) of Valuation Rules unless proven as pure agent expenses under Rule 5(2). The department contended that the respondent failed to meet the criteria for excluding charges like brokerage, palletization, and transportation, claiming them as reimbursable expenses. The department cited a Board Circular stating that expenses forming part of CHA services should not be excluded. The department sought to set aside the order and uphold the demand.

The respondent, a Customs House Agent, argued that the expenses reimbursed were legitimately excluded from the taxable value. The respondent highlighted that the Commissioner considered the departmental circular in her decision. The Commissioner disallowed charges like incidental expenses, examination fees, and communication charges, directing their inclusion in the taxable value. The respondent referenced a previous Tribunal decision in their favor on similar issues. The respondent emphasized that the charges were not for the benefit of the service provider and were properly reimbursed expenses.

Upon review, the Tribunal found that the Commissioner thoroughly analyzed the exclusion of reimbursable expenses based on legal provisions and the Board's Circular. The Commissioner examined the nature of services and supporting documents provided by the respondent. The Tribunal noted the Commissioner's detailed reasoning for excluding certain charges from the taxable value, citing specific examples like airport dues and loading charges. The Tribunal referenced previous decisions supporting exclusion of reimbursable expenses in similar cases. Ultimately, the Tribunal upheld the Commissioner's order, dismissing the Revenue's appeal.

In conclusion, the Tribunal found no grounds to interfere with the Commissioner's decision regarding the exclusion of reimbursable expenses from the taxable value in Customs House Agent services. The Tribunal's decision aligned with previous rulings and upheld the respondent's position, dismissing the Revenue's appeal.