2013 (3) TMI 251 - AT - Service Tax

Service Tax wrongly claimed as reimbursable expenditure and not included in the taxable value for payment of service tax - Held that - The applicants are paying statutory fees on behalf of their clients and the same is recovered separately as shown in the invoices. Hence the applicants have made out a case for waiver of dues. Pre-deposit of the dues is therefore waived and recovery thereof stayed during the pendency of the appeal.

Summary

Issues:
Waiver of pre-deposit of Service Tax amounting to Rs. 1,26,833/- and interest.

Analysis:

Issue 1: Waiver of pre-deposit of Service Tax
The applicant filed an application seeking waiver of pre-deposit of Service Tax and interest amounting to Rs. 1,26,833/-. The demand was confirmed in the impugned order on the grounds that the said amount of Service Tax was attributed to the amount wrongly claimed as reimbursable expenditure, not included in the taxable value for payment of service tax. The applicant contended that they provide Management Consultancy Services and Manpower Recruitment and Supply Agency Services, paying statutory fees or application fees on behalf of their clients. The disputed amount was in respect of such statutory fees paid on behalf of clients, which should not be considered in the gross amount for providing taxable services. The applicant presented evidence, including invoices and proof of deposit of such fees on behalf of clients, to support their contention. The Revenue, however, relied on Section 67 of the Finance Act, 1994, read with Rule 5 of the Valuation Rules, to argue that the applicants are liable to pay service tax on the gross amount received for the services provided.

Issue 2: Decision and Rationale
The Tribunal found that the applicants were indeed paying statutory fees on behalf of their clients, which were separately recovered as shown in the invoices. Considering this, the Tribunal concluded that the applicants had made a case for the waiver of the dues. Consequently, the Tribunal granted the waiver of pre-deposit of the dues and stayed the recovery during the pendency of the appeal. The stay petition was allowed, providing relief to the applicant in this matter.

In conclusion, the Tribunal ruled in favor of the applicant, granting the waiver of pre-deposit of the Service Tax amount and interest, based on the evidence presented regarding the payment of statutory fees on behalf of clients. This decision was made after considering the arguments presented by both parties and the relevant provisions of the Finance Act, 1994, and Valuation Rules.