2018 (7) TMI 1535 - AT - Service Tax

Valuation - inclusion of reimbursement made by the principal to the C&F Agent on account of various expenses - Held that - The decision of Hon ble Supreme Court in the case of UOI Vs. Intercontinental Consultants 2018 (3) TMI 357 - SUPREME COURT OF INDIA is applicable to the facts of present case, where it was held that High Court was right in interpreting Sections 66 and 67 to say that in the valuation of taxable service, the value of tax service shall be the gross amount charged by the service provider for such service and the valuation of tax service cannot be anything more or less than the consideration paid as quid pro qua for rendering such a service. The reimbursement made by the principal to the C&F Agent on account of various expenses do not form part of amount chargeable to Service Tax - appeal dismissed - decided against Revenue.

Summary

Issues: Alleged evasion of Service Tax on reimbursed amounts for services rendered.

Analysis:
1. Issue of Service Tax Evasion: The case involved a dispute regarding the alleged evasion of Service Tax by M/s. Askar Timbers for the period between 01.01.2000 to 30.06.2004 on amounts reimbursed for services provided to M/s. Chettinad Cement Corporation Limited. The Joint Commissioner confirmed the demand for Service Tax, along with interest and penalties. However, the Commissioner (A) set aside the order, citing that various charges reimbursed to the timber company were not leviable to Service Tax, as they were not part of the commission. The Commissioner relied on several cases to support this decision.

2. Contentions of the Department: The Departmental Representative contended that the Commissioner (A) erred in not discussing the merits of the case and solely relying on previous judgments. The Department argued that the reimbursement amounts challenged in other cases before the Supreme Court should be considered for Service Tax. They also referred to a Larger Bench decision stating that only the remunerations paid by the principal to the Clearing and Forwarding Agent are chargeable to Service Tax.

3. Legal Interpretation: The counsel for the respondents presented various decisions to support their claim that reimbursed amounts should not be subject to Service Tax. The Tribunal analyzed the judgments and highlighted the importance of understanding the gross amount charged for providing taxable services. They referenced the interpretation of Section 67 and emphasized that the valuation of taxable services should be based on the consideration paid for rendering such services.

4. Judgment and Conclusion: After hearing both sides and examining the records, the Tribunal found the judgments presented by the appellants relevant. They specifically referenced a Supreme Court judgment emphasizing that amounts calculated not for providing taxable services should not be part of the valuation for Service Tax. As the Department did not present any contrary judgment, the Tribunal concluded that reimbursements made by the principal to the Clearing and Forwarding Agent for various expenses do not constitute a part of the amount chargeable to Service Tax. Consequently, the appeal was dismissed.

This detailed analysis of the legal judgment provides a comprehensive understanding of the issues involved, the arguments presented by both parties, the legal interpretations made by the Tribunal, and the ultimate conclusion reached in the case.