2023 (10) TMI 499 - AT - Service Tax

Levy of Service tax - certain expenses reimbursed by the principal during the period October, 2009 to March, 2010 - appellant providing clearing and forwarding agent services and are registered with the Department - HELD THAT - The issue herein is arising by way of periodical SCN. Earlier also the same issue of the same Appellant has been considered by this Bench in M/S CRYSTAL MARKETING CORPORATION VERSUS COMMISSIONER OF CENTRAL TAX 2019 (6) TMI 1496 - CESTAT HYDERABAD , where the Tribunal held In the present case, the show-cause notice clearly indicates that the disputed amounts are reimbursable expenses, therefore no service tax can be levied on such reimbursable expenses. In view of the precedent Order of this Tribunal in favour of the Appellant on the same issue, the appeal is allowed.

Summary

Issues Involved:
The issue involved in this case is whether the Appellant, providing clearing and forwarding agent services and registered with the Department, is liable to pay Service Tax on certain expenses reimbursed by their principal during the period October 2009 to March 2010.

Summary of Judgment:

Issue 1: Liability to Pay Service Tax on Reimbursed Expenses

The Appellant received reimbursements for various expenses during the period in question. The Revenue contended that the Appellant was liable to pay Service Tax on these reimbursed amounts totaling Rs. 30,03,539/-. A show-cause notice was issued proposing a demand of Rs. 3,09,365/- along with interest and penalty under Section 76 of the Act. The Adjudication Order confirmed the demand and penalty, which was upheld by the Commissioner (Appeals).

Issue 2: Precedent and Legal Interpretation

The Tribunal noted that a similar issue involving the same Appellant had been previously considered by the Bench. Referring to a previous Final Order, the Tribunal held that reimbursable expenses, not forming part of the assessable value, cannot be subjected to Service Tax. The Tribunal cited legal precedents to support this conclusion, emphasizing that Service Tax can only be levied on the gross amount charged for services rendered. Rulings in other cases where expenses were disallowed as deductions were distinguished from the present scenario where the disputed amounts were clearly reimbursable expenses.

Decision

Based on the precedent Order in favor of the Appellant on the same issue, the Tribunal allowed the Appeal and set aside the Impugned Order. The Appellant was granted consequential benefits in accordance with the law.

This judgment clarifies the treatment of reimbursed expenses in relation to Service Tax liability for a clearing and forwarding agent service provider, providing valuable legal interpretation and upholding the Appellant's position based on established legal principles and precedents.