2018 (3) TMI 194 - AT - Service Tax

Valuation - reimbursable expenses - Held that - From the sample copies of the invoices submitted by the respondent in the typeset-3 during hearing, the disputed expenses are very much in the nature of which were reimbursed to them subsequently - There is a plethora of decisions which have consistently laid down that reimbursable expenses cannot be form part of the taxable value for arriving at service tax liability. The Board s Circular No. 119/13/2009-ST dated 21.12.2009 has given broad guidelines that essentially exclusion should be allowed to reimbursable charges incurred by the custom house agent. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Demand of alleged tax liabilities for delayed service tax payment and wrong availment of service tax/Cenvat credit.
2. Denial of service tax credit and imposition of penalties.
3. Appeal against the order confirming the demand of tax liabilities.
4. Interpretation of taxable service value for steamer agent services.
5. Consideration of reimbursable charges in the computation of service tax liability.

Analysis:
1. The case involved the demand of alleged tax liabilities by the department against the respondents for delayed service tax payment and wrong availment of service tax/Cenvat credit. The adjudicating authority confirmed the demand, including the amount on CHA and Steamer Agency services rendered, delayed payment appropriation, and denial of service tax credit. Penalties were also imposed. On appeal, the Commissioner (Appeals) set aside certain demands and penalties, leading to the department's appeal.

2. The department argued that the taxable service value for steamer agent services should include the gross amount charged for various services provided to the shipping line, excluding certain expenses. They highlighted that service charges should constitute specific fees and commissions, excluding other expenses incurred by the agent. The department also raised concerns about charges like telephone, fax, and telex expenses, stating that they should be considered part of the agency's commission.

3. The respondents contended that the demanded service tax related to reimbursable expenses like telephone, fax, and telex charges, and consolidated charges for CHA and Steamer services. They argued that these charges were reimbursable and should not be subject to service tax. The respondents emphasized that such charges were not part of the taxable value for service tax calculation.

4. The Tribunal analyzed the facts and submissions from both sides. They noted the nature of the disputed expenses as reimbursable charges, supported by invoices showing subsequent reimbursement. Referring to relevant decisions and circulars, the Tribunal concluded that reimbursable expenses cannot be included in the taxable value for service tax calculation. They upheld the lower appellate authority's decision, citing consistent legal precedents and guidelines excluding reimbursable charges.

5. Ultimately, the Tribunal found no merit in the department's appeal, rejecting it based on the conclusion that reimbursable charges should be excluded from the computation of service tax liability. The decision highlighted the importance of considering the nature of expenses and following established legal principles in determining taxable service values for service tax purposes.