2020 (10) TMI 476 - AT - Service Tax

Valuation - event management service - non-inclusion of payments pertaining to events organized by them for clients, in the gross amount - period between April 2008 and March 2011 - HELD THAT - The implication is that the contracts entered into with the recipients of event management service by the appellant would determine the extent to which the two parties have visualized the proper rendering of the service and anything beyond those would be rendering of a different service that may or may not be taxable - Furthermore, in terms of the decision of the Hon ble Supreme Court in INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. VERSUS UOI. ANR. 2012 (12) TMI 150 - DELHI HIGH COURT , the reimbursable expenses that can be established as having been incurred for convenience, in accordance with an agreement between the two parties, to be passed on by the appellant without retention of any portion thereof is not amenable to inclusion in the gross amount envisaged in section 67 of Finance Act, 1994. Despite this defence having been placed before the lower authorities, the contentions thereof were not ascertained in the context of the contract and pass through of the payments. Neither before those authorities not before us has the appellant furnished the necessary evidence. This lapse on both sides is required to be resolved before appellate intervention is purposeful - it would be appropriate to set aside the impugned order and remand the matter back to the original authority to dispose of the proposals in the show cause notice - Appeal allowed by way of remand.

Summary

Issues:
1. Non-inclusion of payments in the gross amount for tax liability.
2. Interpretation of section 67 of the Finance Act, 1994.
3. Reimbursed expenses in the assessable value.
4. Applicability of previous judicial decisions.
5. Necessity of evidence in defense.

Analysis:
1. The case involved M/s Radioactiv Entertainment, a partnership firm, being proceeded against for not including payments pertaining to events organized for clients in the gross amount for tax liability between April 2008 and March 2011. The tax authorities claimed the entire billed amount of &8377;2,36,49,608 should have been taxed, leading to a demand confirmation under various sections of the Finance Act, 1994.

2. The dispute revolved around the interpretation of section 67 of the Finance Act, 1994, regarding the inclusion of all costs incurred by the appellant in the assessable value for services rendered to clients. The appellant argued that expenses not directly related to managing the events should not be included, citing legal precedents and decisions by the Hon'ble Supreme Court.

3. The appellant contended that reimbursed expenses, as per the decision in Intercontinental Consultants and Technocrats P Ltd case, should not be part of the assessable value. The Authorized Representative, however, argued for the inclusion of all costs, relying on other tribunal decisions.

4. The Tribunal noted the conflicting decisions and the stay on one particular case by the Hon'ble Supreme Court. It emphasized the importance of considering the specific facts of each case and the finality of decisions by the Supreme Court, rendering tribunal decisions inconsequential in certain situations.

5. Despite the arguments presented, both sides lacked sufficient evidence to support their claims before the lower authorities and the Tribunal. The absence of necessary documentation and clarification regarding the contracts and payment pass-through required resolution before any meaningful appellate intervention could take place.

In conclusion, the Tribunal set aside the impugned order and remanded the matter back to the original authority for reevaluation in light of the Hon'ble Supreme Court's decision, with a directive for the appellant to provide the relevant records for further assessment.