2023 (8) TMI 705 - AT - Service Tax

Short payment of Service Tax on various services - reimbursable expenses collected by the appellant from the clients in the nature of Bill of Lading expenses, Terminal handling charges, Liner DO fees, Container halting and movement charges, etc. - demand of differential tax alongwith interest - HELD THAT - The issue stands covered by the decision 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. The period involved in the appeal is prior to 2015 - therefore the demand cannot sustain. Impugned order is modified to the extent of setting aside the confirmation of duty along with interest. Appeal allowed in part.

Summary

Issues involved: Whether demand on reimbursable expenses collected by the appellant is sustainable.

The appellant, engaged in "Freight Forwarding of imported and exported goods," was found to have short paid service tax on various services. The original authority confirmed the demands, which were later set aside by the Commissioner (Appeals) except for demand on reimbursable expenses. The appellant appealed against this decision.

During the appeal, the appellant's consultant argued that the demand was raised on charges collected from clients, such as Bill of Lading expenses, Terminal handling charges, Liner DO fees, and Container halting charges, which were expenses reimbursed to the appellant. Referring to a Supreme Court case, the consultant requested that the appeal be allowed.

The Department, represented by the Assistant Commissioner, supported the findings in the impugned order.

The Tribunal found that the demand on reimbursable expenses collected by the appellant was not sustainable based on the Supreme Court decision in the case of UOI Vs Intercontinental Consultants and Technocrats Pvt. Ltd. The period involved in the appeal was prior to 2015. Therefore, the demand was set aside, and the appeal was allowed with consequential relief.