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2024 (5) TMI 565 - AT - Service TaxValuation of service - reimbursements includible in the total consideration for payment of Service Tax or not - Extended period of limitation - HELD THAT - The Appellants have been receiving reimbursements for various expenses like medical expenses, stationery expenses, etc., from RINL. It is found that the issue is squarely covered by the decision of 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 , wherein it has been held the value of such material which is supplied free by the service recipient cannot be treated as gross amount charged and that is not the consideration for rendering the services. Therefore, value of free supplies of diesel and explosives would not warrant inclusion while arriving at the gross amount charged on its Service Tax is to be paid. Similarly, the Hon ble Supreme Court in the case of COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. 2018 (2) TMI 1325 - SUPREME COURT , have held that free supplies would not form part of the total value for charging of Service Tax. It can be observed from the above decisions that in the case of other units of the same Appellant, identical issues were raised by the Appellant and in all these cases it has been held that the reimbursement expenses are not to be added to the gross value for arriving at the Service Tax payable. The Rule 5 of the Service Tax (Determination of Value) Rules has been held as ultra vires by the Hon ble High Court and Hon ble Supreme Court. Extended period of limitation - HELD THAT - There are force in the argument of the Appellant that the confirmed demand for the extended period is hit by time bar. The Appellant is a reputed Government of India Undertaking, working under the Ministry of Home Affairs. They cannot be said to have any intention to evade the Service Tax payment. Further, the decisions of Hon ble Supreme Court in the case of Intercontinental Consultants Technocrats Pvt Ltd and Bhayana Builders Pvt Ltd would have given bonafide belief to the Appellant for non-charging and non-payment of Service Tax on the reimbursements and rent free accommodation. Therefore, the confirmed demand for the period 01.04.2009 to 31.03.2011 is legally not sustainable. The confirmed demand for this period is set aside on account of time bar also. The Appeal stands allowed both on merits and on limitation.
Issues Involved:
1. Reimbursements as part of taxable value. 2. Excess pension contribution fund. 3. Rent-free accommodation as additional consideration. 4. Time-barred demand. Summary: Reimbursements as Part of Taxable Value: The Appellant, CISF, received reimbursements for expenses such as medical bills and transportation costs from RINL. The Department argued these should be included in the total consideration for Service Tax under Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006. The Tribunal referred to the Supreme Court's decision in *UOI vs Intercontinental Consultants & Technocrats Pvt Ltd* [2018 (10) GSTL 401 (SC)], which held that Rule 5 was ultra vires and reimbursements cannot be part of the taxable value. The Tribunal also cited similar cases where reimbursements were excluded from the gross value for Service Tax purposes, such as *CISF vs CC, CE & ST, Allahabad* [2019 (1) TMI 1661 - CESTAT Allahabad]. Excess Pension Contribution Fund: The Appellant argued that excess pension contributions received from RINL were returned in subsequent months and were not part of the consideration. The Tribunal agreed, citing the same legal precedents. Rent-Free Accommodation as Additional Consideration: The Department claimed that rent-free accommodation provided by RINL should be considered additional consideration under Section 67 of the Finance Act. The Appellant relied on *CST vs Bhayana Builders (P) Ltd* [2018 (2) TMI 1325 (SC)], where it was held that free supplies do not form part of the taxable value. The Tribunal noted consistent decisions in similar cases, such as *CGST, CCE, Dehradun vs Commandant CISF Unit* [2019 (2) TMI 1175 - CESTAT New Delhi], and ruled that rent-free accommodation is not exigible to Service Tax. Time-Barred Demand: The Appellant contended that the Show Cause Notice issued on 13.06.2012 for the period 01.04.2009 to 30.09.2011 was time-barred for the period 01.04.2009 to 31.03.2011. The Tribunal found merit in this argument, noting that the Appellant, being a Government of India Undertaking under the Ministry of Home Affairs, had no intention to evade Service Tax. The Tribunal held that the confirmed demand for the extended period was legally not sustainable due to time bar. Conclusion: The Tribunal allowed the Appeal both on merits and on limitation, setting aside the confirmed demands and granting the Appellant consequential relief as per law.
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