2018 (6) TMI 1432 - AT - Service Tax

Valuation - Inclusion of Reimbursable Expenses in assessable value - expenses like bank commission, EDI charges and bond paper charges - Held that - The disputed expenses are only of the type which are reimbursed at actuals by the clients of the appellants. They would therefore only fall within the category of reimbursable expenses - appeal allowed - decided in favor of appellant.

Summary

Issues:
Taxability of certain charges in Custom House Agent's service.

Analysis:
The case involved appeals related to the taxability of certain charges in Custom House Agent's service. The department contended that certain charges excluded by the assessee should be included in the taxable value for service tax. The adjudicating authority confirmed demands for bank commission, EDI, and bond paper charges, considering them as operative charges and documentation expenses incurred for providing CHA services. The demands were challenged through appeals filed by both the assessee and the department.

During the hearing, the assessee's advocate argued that the expenses in question were collected from clients on an actual basis and were reimbursable expenses incurred only on behalf of the clients. Referring to sample invoices and agreements, it was highlighted that the assessee charged clients at actuals for such reimbursement expenses. The advocate relied on a precedent set by the Hon'ble Apex Court, stating that reimbursable expenses cannot be included in the taxable value of services.

On the other hand, the Revenue's representative supported the impugned orders and reiterated the grounds of appeal in departmental appeals. After hearing both sides, the tribunal concluded that the disputed expenses were reimbursed at actuals by the clients and fell under the category of "reimbursable expenses." Citing the precedent mentioned earlier, the tribunal held that such expenses cannot be considered part of the taxable value of services. Consequently, the tribunal allowed the assessee's appeals and dismissed the departmental appeals.

In the final order, the tribunal allowed both of the assessee's appeals with consequential benefits, if any, as per law, while dismissing both of the departmental appeals. The judgment emphasized that the disputed expenses, being reimbursable at actuals, could not be included in the taxable value of services, as per the legal precedent cited during the proceedings.