2024 (9) TMI 318 - AT - Service Tax

Levy of service tax - re-imbursement of port charges during provisioning of CHA service - commission under Business Auxiliary Service. CHA Service - amount received as forklift expenses and various other charges is reimbursable - HELD THAT - It is settled that other than service charge of service of CHA any reimbursable expenses incurred on behalf of the clients is not liable to service tax - As held by Hon ble Supreme Court in the case of IUNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. 2018 (3) TMI 357 - SUPREME COURT and various other judgments relied upon by the appellant. Hence the demand on such reimbursable expenses is set-aside. Demand of service tax on Business Auxiliary Service (commission) - HELD THAT - The learned consultant is agreed upon that demand of Rs. 31,859/- for the period 01.10.2003 to 31.03.2004 is not sustainable as the same is covered under general exemption N/N. 13/2003-ST dated 20.06.2003. Therefore, this demand of Rs. 31,859/- is set-aside and the remaining demand on Commission is upheld. The impugned order stand modified to the above extent - Appeal allowed in part.

Summary

Issues:
1. Demand of service tax on CHA service including reimbursement of expenses.
2. Demand of service tax on Business Auxiliary Service (BAS) commission.

Analysis:
1. The appellant, engaged in Custom House Agent (CHA) service, was issued a show cause notice demanding service tax and penalties. The Adjudicating Authority confirmed the demand, leading to an appeal. The appellate authority upheld the demand for service tax under CHA service and BAS, along with penalties. The appellant contended that reimbursement of actual expenses is not taxable under CHA service, citing relevant judgments. The Tribunal noted that reimbursable expenses, other than service charges, are not liable for service tax, relying on legal precedents. Consequently, the demand on reimbursable expenses was set aside.

2. Regarding the demand on BAS commission, the appellant argued that it was not taxable under a specific notification. The Tribunal agreed, setting aside a portion of the demand covered by the exemption notification. The remaining demand on commission was upheld. The impugned order was modified accordingly, partially allowing the appeal. The Tribunal's decision was based on careful consideration of submissions and legal principles, ultimately providing relief to the appellant on certain aspects of the service tax demand.