2007 (7) TMI 188 - AT - Service Tax

Appellants paid tax on service charges received by them from their clients for C&F service whether tax is payable on amounts collected from their clients towards expenses incurred in connection with the said service it is not in dispute that various charges which were alleged by the Revenue to be includible in the taxable value of C&F service were reimbursed by the principals on the basis of actuals hence as per rule 6(8), tax not payable on impugned amount assessee s appeal allowed

Summary

Issues:
Service tax liability on Clearing & Forwarding (C&F) services for the period Dec1999-Nov2003 based on Rule 6(8) of the Service Tax Rules, 1994.

Analysis:

1. The lower authorities demanded service tax of Rs.5,67,373/- from the appellants for C&F services and imposed penalties. The dispute revolves around whether service tax should be levied on the entire amount received from clients or only on service charges. The appellants argue they paid tax on service charges, while the Revenue contends tax should also cover expenses reimbursed by clients. The appellants cite a recent decision in their favor. The Tribunal notes the appellants paid tax on remuneration received, complying with Rule 6, and rejects the Revenue's attempt to include reimbursed expenses in the taxable value. The Tribunal references previous cases to support its decision, emphasizing the distinction between taxable value for C&F services and other services like Consulting Engineer's service, where expenses may be added. The Tribunal concludes that the appellants' tax payment on remuneration aligns with legal requirements, setting aside the impugned order and allowing the appeal.

2. The Tribunal refers to Final Order No.902/07, which interprets Rule 6(8) of the Service Tax Rules, 1994. The provision deems the taxable value of C&F services to be the remuneration or commission paid to the agent by the client. The Tribunal highlights that the appellants paid tax on remuneration as required by Rule 6. The Revenue's attempt to include expenses reimbursed by clients in the taxable value is deemed beyond the scope of Rule 6(8) based on previous Tribunal decisions. The Tribunal clarifies that expenses reimbursed by clients were not to be added to the taxable value of C&F services, distinguishing this case from others where expenses were included based on Section 67. The Tribunal upholds the appellants' tax payment on remuneration as sufficient to meet legal requirements, leading to the appeal's allowance.

3. The Tribunal's decision is influenced by the interpretation of Rule 6(8) and the correct application of taxable value for C&F services. By aligning the tax liability with the remuneration received from clients, the Tribunal ensures compliance with the law and rejects the Revenue's attempt to expand the taxable value to include reimbursed expenses. The Tribunal's reliance on previous decisions and legal provisions supports its conclusion that the appellants' tax payment on remuneration suffices, warranting the setting aside of the impugned order and allowing the appeal.