2021 (10) TMI 848 - AT - Service Tax

Levy of service tax - postal charges/courier charges - reimbursable expenses - period is from 12/2004 to 3/2009 - HELD THAT - During the relevant period, reimbursable expenses were not includible in the taxable value for determining the tax liability. The amendment in this regard so as to include reimbursable expenses also in the gross amount came to be introduced only w.e.f. 14th May, 2015. The issue stands decided by the judgment of the Hon ble Supreme Court in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. 2018 (3) TMI 357 - SUPREME COURT 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. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether postal charges incurred during the provision of Banking and other Financial Services are includible in the gross value of taxable service for the purpose of service tax liability.

Analysis:
The appellant, engaged in providing taxable services, received postal recovery charges from customers during an audit, leading the department to include these charges in the taxable value for service tax assessment. The show-cause notice was issued for the period from 01.12.2004 to 31.03.2009, demanding service tax on these charges and proposing penalties. The original authority, followed by the Commissioner (Appeals), confirmed the demand, interest, and penalties, prompting the appeal.

The appellant argued that postal charges are reimbursable expenses and should not be included in the taxable value, citing the Supreme Court's decision in a relevant case. The Tribunal's decisions in other cases supported this stance, emphasizing that reimbursable expenses were not includible in the taxable value during the relevant period. The amendment to include such expenses was effective only from 14th May, 2015.

The issue was settled by the Supreme Court's judgment in a specific case, which was followed by the Tribunal in similar cases, concluding that postal and courier charges, as reimbursable expenses, should not be considered in the taxable value for service tax liability. Consequently, the impugned order was set aside, and the appeal was allowed with any necessary consequential reliefs.