2013 (3) TMI 541 - AT - Service Tax

Short payment of service tax - whether reimbursement charges should form part of the gross value for the discharge of Service Tax liability? - Held that - As different benches are taking different views on includibility or otherwise of the reimbursement charges received by a provider of taxable service in the calculation of gross amount for discharge of service tax it is deem fit to refer the matter to the Hon ble President to constitute a larger bench and settle the issue of includibility or otherwise of the reimbursement charges . Registry is directed to place this file before the Hon ble President for constituting a larger bench.

Summary

Issues Involved:
- Discharge of Service Tax liability on reimbursements received by a Clearing & Forwarding Agent
- Interpretation of whether reimbursements should be included in the gross value for Service Tax calculation

Analysis:

Issue 1: Discharge of Service Tax liability on reimbursements received by a Clearing & Forwarding Agent
The appeal was filed against an Order-in-Original (OIO) where the appellant, a Clearing & Forwarding Agent, was found to have not correctly discharged the Service Tax liability. The Revenue officers noted that the appellant did not include reimbursements received for transportation charges, loading and unloading charges, rent, staff salary, and other expenses in the taxable service value. The adjudicating authority held that by excluding these reimbursements, the appellant underpaid the Service Tax due.

Issue 2: Interpretation of whether reimbursements should be included in the gross value for Service Tax calculation
The appellant argued that previous tribunal judgments supported the exclusion of reimbursement charges from the gross value for Service Tax purposes. They cited various cases where it was held that certain expenses like loading/unloading charges or transportation charges should not be added to the Service Tax liability. However, the Departmental Representative relied on a different case where it was suggested that expenses incurred on reimbursements should be included in the taxable service value.

Judgment:
After considering the arguments from both sides and reviewing previous tribunal decisions, the bench noted conflicting views on the treatment of reimbursement charges in Service Tax calculations. Given the divergence in opinions among coordinate benches, the matter was referred to the Hon'ble President to constitute a larger bench and resolve the issue of "includibility or otherwise of the reimbursement charges" in the calculation of Service Tax. The registry was directed to present the case before the larger bench for further examination and clarification.

This detailed analysis highlights the core issues of the case, the arguments presented by both parties, and the decision to refer the matter to a larger bench for a conclusive determination on the treatment of reimbursement charges in Service Tax calculations.