2019 (2) TMI 139 - AT - Service Tax

Levy of service tax - reimbursement of fixed expenses - taxable service of commission agent falling under the category of Business Auxiliary service provided - Held that - The issue has already been decided in favor of the assessee in the Tribunal s decision Jayem Impex Pvt. Ltd. Vs CST Chennai 2018 (8) TMI 1514 - CESTAT CHENNAI , where it was held that such reimbursable cost shall not form part of valuation of taxable services prior to 14.05.2015 - appeal allowed - decided in favor of appellant.

Summary

Issues: Liability of service tax on reimbursement of fixed expenses.

The judgment involves a case where the appellant, registered with the department as a commission agent, received reimbursement of fixed expenses from a company for procuring orders. The dispute revolved around the liability of service tax on these reimbursed fixed expenses. The department contended that the reimbursed fixed expenses should be included in the taxable value. The proceedings initiated resulted in a show cause notice proposing a demand for service tax, interest, and penalties. The original authority confirmed the demand, and the Commissioner (Appeals) upheld the decision, leading the appellants to appeal before the tribunal.

During the hearing, the appellant's advocate argued that the reimbursement of fixed expenses was for the establishment cost and had no connection with the taxable service of procuring orders. The advocate cited a previous decision by the tribunal in the case of Jayem Impex Pvt. Ltd. Vs CST Chennai, where a similar issue was decided in favor of the assessee. The advocate emphasized that the issue was no longer open for debate and should be decided in line with the previous ruling.

The tribunal, after hearing both sides and considering the facts, agreed with the appellant's argument. They referenced the decision in the case of Jayem Impex Pvt. Ltd. Vs CST Chennai and highlighted that the issue had already been settled in favor of the assessee. They further mentioned a ruling by the Hon'ble Apex Court in the case of UOI Vs Intercontinental Consultants And Technocrats Pat. Ltd., which clarified that reimbursable costs should not be part of the taxable value before a certain date. Based on these precedents, the tribunal set aside the impugned order, allowing the appeal with consequential relief as per the law.

In conclusion, the tribunal ruled in favor of the appellant, holding that the impugned order could not be sustained, and it was set aside. The decision was based on the established legal principles and precedents cited during the proceedings, providing relief to the appellant in the matter of liability for service tax on reimbursement of fixed expenses.