2018 (8) TMI 1518 - AT - Service Tax

Valuation - C&F Agents services - The adjudicating authority has confirmed the demands on the ground that the gross amount of commission received is taxable while it is the case of the appellant that the gross amount which is received as commission needs to be reduced by the amount of salary paid for his staff and the amounts which he has incurred for the godown. Held that - There are no merits in the appeal filed by the appellant as no documents evidencing the claim is adduced - also the 1st appellate authority has given a well reasoned order that It is only the cost incurred by the service provider in providing certain services not falling within the realm of the taxable service that are deductible while arriving at the value of the taxable service and not every expenditure by the appellant. Appeal dismissed - decided against appellant.

Summary

Issues involved:
1. Payment of service tax on commission received for C&F agent services.
2. Valuation of taxable services and inclusion of expenditure reimbursed.

Analysis:

Issue 1: Payment of service tax on commission received for C&F agent services
The appellant filed an appeal against Order-in-Appeal No. 42-2008-G-ST dated 20/05/2009 regarding the payment of service tax on commission received for C&F agent services. The adjudicating authority confirmed the demands, stating that the gross amount of commission received is taxable. However, the appellant argued that the gross amount received as commission should be reduced by the amount of salary paid for staff and expenses incurred for the godown. The appellate tribunal found no merit in the appeal as the appellant failed to provide any documents supporting the claim. The 1st appellate authority's well-reasoned order highlighted that all expenses incurred by the appellant in providing C&F agent services should be included in the value of taxable services. The tribunal upheld the authority's decision, stating that only costs incurred by the service provider in providing non-taxable services are deductible while arriving at the value of taxable services. Therefore, the tribunal rejected the appeal based on the findings and the law's contemplation.

Issue 2: Valuation of taxable services and inclusion of expenditure reimbursed
The 1st appellate authority's order emphasized that all expenses incurred by the appellant in providing C&F agent services should be included in the value of taxable services. The authority noted that if the appellant received amounts for expenditure not directly related to the services rendered, no service tax can be levied on those amounts. The authority also pointed out that the appellant's agreement with principals stated that the company is not liable for certain expenses, indicating that those expenses were not incurred on behalf of the principals. The authority clarified that only costs incurred in providing non-taxable services are deductible while determining the value of taxable services. The tribunal concurred with the authority's findings, stating that the valuation adopted by the adjudicating authority did not require any interference, and accordingly, the appeal was rejected.

In conclusion, the appellate tribunal upheld the decision regarding the payment of service tax on commission received for C&F agent services and the valuation of taxable services, as per the well-reasoned order of the 1st appellate authority. The tribunal found no grounds to interfere with the authority's decision and rejected the appeal accordingly.