2018 (8) TMI 1222 - AT - Service Tax

Banking and Other Financial Services - reimbursable postage charges in sending ordinary notice, registered notice and legal notices - Held that - The issue is squarely settled in favour of the appellants in the case of UOI vs. Intercontinental Consultants and Technocrats Pvt. Ltd. 2018 (3) TMI 357 - SUPREME COURT OF INDIA wherein the Hon ble Supreme Court has categorically observed that only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the reimbursed stamp charges received by the appellants are chargeable to service tax.

Analysis:
The case involved an appeal by M/s. Karnataka Vikas Grameena Bank against a demand for payment of service tax on postal charges reimbursed by customers for issuing or serving notices/legal notices. The Assistant Commissioner and Commissioner (A) had confirmed the demand. The appellants argued that postage charges are not liable to service tax, citing legal precedents such as UOI vs. Intercontinental Consultants and Technocrats Pvt. Ltd., State Bank of India vs. CCE, Link Intime India Pvt. Ltd. vs. CCE, and Rolex Logistics Pvt. Ltd. vs. CST, Bangalore.

The Department contended that the services fell under 'Banking and Other Financial Services' as per Section 65(105)(zm) of the Finance Act, 1994. The Departmental Representative supported the findings of the Order-in-Original and Order-in-Appeal. Upon hearing both sides and examining the records, the Tribunal focused on whether the reimbursed stamp charges were subject to service tax. The Tribunal referred to the case of UOI vs. Intercontinental Consultants and Technocrats Pvt. Ltd., where the Supreme Court clarified that such reimbursable expenditure would be part of taxable services for service tax only from May 14, 2015, as per Section 67. Additionally, the Tribunal noted the precedent set by the State Bank of India case, which supported the appellants' position. Consequently, the appeal was allowed in favor of the appellants, granting any consequential relief.

The judgment was delivered by Mr. P. Anjani Kumar, the Technical Member of the Appellate Tribunal CESTAT Bangalore. The operative portion of the Order was pronounced on 23/07/2018.