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2023 (3) TMI 16 - AT - Service TaxValuation of services - Business Auxiliary Services - undervaluation by not including the taxable value of the amounts of reimbursements received by them for their services - whether service tax can be demanded on reimbursable expenses? HELD THAT - From the show cause itself it is clear that the demand is made for the non-inclusion of reimbursable expenses in the taxable value for discharge of service tax liability. The issue is settled in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. 2018 (3) TMI 357 - SUPREME COURT . Following the same, it is held that the demand cannot sustain and requires to be set aside. The impugned order is set aside. Appeal allowed.
Issues: Whether service tax can be demanded on reimbursable expenses.
Analysis: The case involves the appellant, registered for service tax under "Business Auxiliary Services," facing a demand for service tax on reimbursable expenses during 2005-06 to 2009-10. The appellant was accused of undervaluation by not including the taxable value of reimbursements in their services. The original authority confirmed the demand, leading to an appeal before the Commissioner (Appeals), who upheld the demand, resulting in the current appeal. The appellant's counsel argued that the issue was settled by the Hon'ble Apex Court in a previous case and cited precedents where similar issues were decided in favor of the appellant. The counsel contended that service tax cannot be levied on reimbursable expenses, which was supported by the decisions mentioned. The Department's representative, however, supported the findings in the impugned order. After hearing both sides, the Tribunal examined whether service tax could be demanded on reimbursable expenses. Referring to the case of UOI Vs Intercontinental Consultants and Technocrats, the Tribunal concluded that the demand for non-inclusion of reimbursable expenses in the taxable value for service tax liability could not be sustained. Therefore, the Tribunal set aside the impugned order, allowing the appeal with consequential relief, if any, as per the law. In conclusion, the Tribunal ruled in favor of the appellant, holding that service tax cannot be demanded on reimbursable expenses based on legal precedents and settled law, ultimately setting aside the demand and providing relief to the appellant.
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