2020 (7) TMI 653 - AT - Service Tax

Valuation - Reverse Charge Mechanism - Clearing and Forwarding service - Goods and Transport Agency service - inclusion of reimbursement of expenses in assessable value - pure agent services - Department was of the view that appellant adopted a novel modus operandi by which it bifurcated the amount received by it from various service recipients under two different category of services i.e. Clearing and Forwarding services and Goods and Transport Agency service - allegation that the appellant had not declared the taxable value correctly as gross receipts as per section 67 of the Finance Act, 1994 for the purpose of payment of Service Tax - period 2007-2008 to 2011-2012. HELD THAT - So far as the issue pertaining to reimbursement of expenses incurred by the appellant on account of service recipient working as pure agent for his principals, the same is not includable in the assessable value for charging service tax - This view has been expressed by Supreme Court in Union of India vs. Intercontinental Consultants and Technocrats Pvt Ltd. 2018 (3) TMI 357 - SUPREME COURT . Demand on an amount of ₹ 4,39,65,823/- received by the appellant for using its own truck for providing transportation service to the principal companies for which it was working as Clearing and Forwarding agent - HELD THAT - The records indicate that the service recipients such as M/s. Hindustan Unilever Ltd. have confirmed payment of service tax on the transportation of goods service provided by the appellant. However, this needs to be verified after detailed examination of the books of accounts and service tax return filed by the service recipient. Thus, this factual position should be examined by the Adjudicating Authority on the basis of records. Appeal allowed by way of remand.

Issues Involved:
1. Alleged short payment of service tax by the appellant.
2. Reimbursement of expenses and its inclusion in the assessable value for service tax.
3. Service tax liability on transportation charges received by the appellant.
4. Limitation and invocation of extended period for demand.

Issue-wise Detailed Analysis:

1. Alleged Short Payment of Service Tax:
The Department conducted an audit and concluded that the appellant, a Clearing and Forwarding agent, had not declared the taxable value correctly as per section 67 of the Finance Act, 1994. The appellant bifurcated the amount received under two categories: 'Clearing and Forwarding services' and 'Goods and Transport Agency service', leading to a demand of ?1,91,28,126/- along with interest and penalties under sections 73, 75, 76, 77, and 78 of the Finance Act, 1994.

2. Reimbursement of Expenses:
The appellant contended that ?93,96,803/- received from principal companies towards reimbursable expenses (depot expenses, weighing machine charges, etc.) should not be subject to service tax. The appellant relied on judgments such as Union of India vs. Intercontinental Consultants and Technocrats Pvt Ltd. [2018(10) GSTL 401(SC)] which held that reimbursable expenses are not includable in the assessable value for service tax. The Tribunal agreed but noted that verification of the actual reimbursed amount was necessary.

3. Service Tax Liability on Transportation Charges:
The appellant argued that ?4,39,38,823/- received for using its own trucks for transportation was not liable for service tax as the principal companies had already discharged the service tax liability under 'Goods Transport Agency service'. The Tribunal acknowledged the certificates and letters from the principal companies confirming payment of service tax but emphasized the need for verification of records to avoid double taxation as per CBEC instructions dated 24 April, 2002.

4. Limitation and Invocation of Extended Period:
The appellant claimed the entire demand was barred by limitation, arguing the absence of malafide intention, suppression of facts, or intent to evade tax. The Tribunal did not explicitly rule on this issue but remanded the matter for verification, implicitly suggesting that the adjudicating authority should consider this aspect during re-examination.

Conclusion:
The Tribunal set aside the Order-in-Original and remanded the matter to the Adjudicating Authority for fresh adjudication. The authority was directed to verify the claims regarding reimbursable expenses and service tax liability on transportation charges, ensuring compliance with the principles laid down by the Supreme Court in relevant judgments. The appeal was allowed by way of remand.

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