2018 (9) TMI 1666 - AT - Service Tax

Valuation - inclusion of reimbursable expenses in assessable value - Held that - The issue is decided in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. 2018 (3) TMI 357 - SUPREME COURT OF INDIA , where it was held 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 - demand do not sustain. CENVAT Credit - input service used for non-taxable output service - Held that - In the case of THE COMMISSIONER OF CENTRAL EXCISE BANGALORE-V VERSUS M/S. VISHAL PRECISION STEEL TUBES AND STRIPS PVT. LTD. 2017 (3) TMI 1287 - KARNATAKA HIGH COURT , it was held that The final product is treated as dutiable and duty is paid by the assessee. When once duty is paid by the assessee treating the activity as manufacturing activity by the Department, CENVAT credit is available and there is no question of reversal of CENVAT credit - credit remains allowed. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Liability to pay service tax on reimbursable expenses.
2. Wrong availment of CENVAT credit for non-taxable output service.

Analysis:
1. Liability to pay service tax on reimbursable expenses:
The case involved the appellants engaged in cargo handling services facing a demand for service tax on reimbursable expenses and CENVAT credit. The department issued a show cause notice proposing the demand along with penalties. The original authority confirmed the proposal, which was partially upheld by the Commissioner (Appeals). The appellant, represented by counsel, relied on legal precedents to argue against the demand. The counsel cited the decision of the Hon’ble Supreme Court in a specific case, emphasizing that credit utilized for payment of duty not required to be paid does not need to be reversed. The Tribunal acknowledged the legal arguments and set aside the impugned order, allowing the appeal.

2. Wrong availment of CENVAT credit for non-taxable output service:
Regarding the alleged wrong availment of CENVAT credit for services used in non-taxable output services, the appellant's counsel referenced several case laws to support their position. The counsel highlighted that the credit used for duty payment not required to be paid does not need to be reversed, as established in the cited legal precedents. The Tribunal, after considering the arguments from both sides, agreed with the appellant's counsel that the issues were covered by the case laws relied upon. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief as per the law.

In conclusion, the Tribunal's judgment in the case addressed the liability for service tax on reimbursable expenses and the wrong availment of CENVAT credit for non-taxable output services. By considering legal precedents and arguments presented by the appellant's counsel, the Tribunal set aside the impugned order, allowing the appeal and providing relief in accordance with the law.