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2022 (4) TMI 565 - AT - Service TaxLevy of Service Tax - reimbursement of electricity charges received from the service recipient M/s Gujarat Gas Company Ltd. - appellant is acting as pure agent - HELD THAT - An identical issue involving under the identical contract has been decided by this Tribunal in the case of PRAGATI CNG, SHREE UMIYA ENTERPRISE VERSUS C.C.E. S.T. -SURAT-I 2021 (11) TMI 660 - CESTAT AHMEDABAD by relying the decision of Tribunal in the case of VV BROTHERS VERSUS C.C.E. S.T. - SURAT-I 2020 (1) TMI 986 - CESTAT AHMEDABAD where it was held that the electricity charges which is reimbursed on actual basis in terms of the contract is not includible in the gross value of service provided by the appellant to Gujarat Gas Company Limited. Thus, the issue involved herein has been settled inasmuch as the electricity charges reimbursed to the service provider by the service recipient not includible in gross value of service. Following the ratio of the above judgment, the demand is not sustainable - appeal allowed - decided in favor of appellant.
Issues:
1. Liability to pay service tax on reimbursement of electricity charges. 2. Invocation of the extended period of limitation for demand of service tax. Analysis: Issue 1: Liability to pay service tax on reimbursement of electricity charges The case involved an appellant providing Business Auxiliary Service to a company by offering infrastructural support, including land, building, equipment, manpower, and selling of CNG gas. The dispute arose when the department noticed a significant difference between the taxable value shown in ST-3 returns and the service charge received in the bank account, leading to a demand for service tax on reimbursement of electricity expenses. The appellant contended that the electricity charges were reimbursed and should not be included in the assessable value for service tax. The appellant relied on various judgments, including Union of India Vs Intercontinental Consultants and Technocrats Pvt. Ltd., to support their argument. The Tribunal, considering similar cases, held that electricity charges reimbursed on an actual basis as per the contract should not be included in the gross value of the service provided. The Tribunal referred to the principles established in earlier cases to support its decision, ultimately allowing the appeal and setting aside the demand for service tax on electricity charges. Issue 2: Invocation of the extended period of limitation The appellant argued that the extended period of limitation invoked by the adjudicating authority was unlawful and not applicable in this case. They contended that they had regularly filed ST-3 returns, and the department had previously accepted these returns during an audit for the period from April 2006 to March 2010. The appellant cited various judgments, such as Uniworth Textiles Ltd. Vs. CCE, Raipur, to support their claim that the extended period should not be invoked due to the absence of fraud, misstatement, or suppression of facts. The Tribunal, after considering the submissions, found that the demand was not sustainable based on the settled issue regarding the non-inclusion of electricity charges in the gross value of service. Consequently, the impugned order was set aside, and the appeal was allowed. In conclusion, the Tribunal's judgment in this case clarified the liability of the appellant to pay service tax on reimbursement of electricity charges and addressed the invocation of the extended period of limitation, ultimately ruling in favor of the appellant based on established legal principles and precedents.
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