2024 (1) TMI 397 - AT - Service Tax

Valuation of service tax - inclusion of reimbursed charges in the assessable value - section 67 of the Finance Act 1994 read with Rule 5(1) (2) of the Service Tax (Determination of Value) Rules, 2006 - pure agent services - HELD THAT - It would be important for the appellant to clearly identify what the reimbursement being claimed are, since the nomenclature used by the Appellant is not decisive of its nature; to claim exclusion of expenses incurred as pure agent, they would have to satisfy the conditions mentioned in the Rule as listed above. Merely stating that the charges were paid by them to service providers who do not issue any bills/ receipts and accordingly they had correctly discharged their service tax burden, will not come to their help. The Hon ble Supreme Court in Khedut Sahakari Ginning and Pressing Society v. State of Gujarat 1971 (9) TMI 160 - SUPREME COURT has placed emphasis on the need to closely scrutinize the documents between the parties. Tthe primary objection raised by the learned Commissioner in the impugned order is that the appellant did not furnish any supporting documents to prove their case and in the absence of any supporting document he was unable to accept the claim of the appellant that they fulfilled the stipulated conditions. Whereas it is the case of the appellant that all the documents and records were taken over by the Investigating Officers and hence, there was nothing left with the appellant to be furnished before the lower authority. In fact, the appellant has pleaded before us that he has all the documents to substantiate all his claims. In the circumstances, the issue requires to be re-determined afresh to prevent a failure of justice. It is deemed appropriate to set aside the impugned order - case remanded back to the file of the adjudicating authority for de novo adjudication - appeal disposed off by way of remand.

Issues Involved:
1. Whether the appellant is liable to pay Service Tax in respect of Custom House Agent (CHA) Service.
2. Whether the demand of Service Tax under Goods Transport Agency (GTA) Service is in order.
3. Whether the appellant is liable to pay Service Tax in respect of Business Auxiliary Service.
4. Whether the invocation of extended period of limitation under proviso to Section 73(1) of the Finance Act, 1994 is justified.

Summary:

Issue 1: Liability to Pay Service Tax for Custom House Agent (CHA) Service
The Revenue contended that the appellant, a CHA, excluded various operational expenses from the gross receipt, which was against section 67 of the Finance Act 1994 and Rule 5(1) & (2) of the Service Tax (Determination of Value) Rules, 2006. The appellant argued that they acted as a pure agent for importers/exporters, incurring expenses reimbursed by clients. The adjudicating authority held that the appellant did not provide sufficient documents to prove their case as a pure agent and confirmed the demand. The Tribunal noted that Rule 5(1) was declared ultra vires by the Delhi High Court in Intercontinental Consultants and Technocrats Pvt. Ltd., but Rule 5(2) was still applicable. The Tribunal remanded the case for re-determination, emphasizing the need for proper documentation.

Issue 2: Demand of Service Tax under Goods Transport Agency (GTA) Service
The appellant had paid Service Tax of Rs.25,31,099/- along with interest of Rs.4,58,032/-. The Tribunal did not provide specific findings on this issue but implied that the adjudicating authority should re-examine this aspect during the de novo adjudication.

Issue 3: Liability to Pay Service Tax for Business Auxiliary Service
The appellant contended that they did not collect Service Tax from liners and that the demand was computed on a cum-tax basis. They had paid interest on the amount received as an incentive, which they argued was not taxable. The Tribunal directed the adjudicating authority to consider these contentions afresh during the re-determination process.

Issue 4: Invocation of Extended Period of Limitation
The appellant argued that the demands were based on audit objections, and hence, the extended period of limitation could not be invoked. The Tribunal did not make a specific ruling on this issue but included it in the remand for re-examination.

Conclusion:
The Tribunal set aside the impugned order and remitted the case back to the adjudicating authority for de novo adjudication, instructing the authority to consider the Tribunal's observations, provide reasonable opportunities for the appellant to be heard, and pass a new adjudication order in accordance with the law. All contentions were left open for reconsideration. The appeals were disposed of by way of remand.

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