2015 (9) TMI 533 - AT - Service Tax

Valuation - reimbursement of expenses - Clearing & Forwarding services - appellants have claimed deductions towards reimbursable charges under the head VSAT Allowances & Delivery Charges - Held that - appellants have entered into a contract agreement with Castrol India Ltd. which covers entire functions of clearing and forwarding of the appellant. Therefore, service tax is demandable on the gross amount and the same cannot be vivisected. - LAA has rightly upheld the demand - Decided against the assessee.

Summary

Issues Involved:
1. Failure of the appellant to appear for the hearing and lack of fresh vakalat filed.
2. Taxability of service tax under the category of Clearing & Forwarding services for VSAT Allowances & Delivery Charges.
3. Confirmation of demand, penalty imposition, and rejection of appeal by the Commissioner (Appeals).

Issue 1: Failure to Appear for Hearing
The appellant failed to appear for the hearing despite multiple adjournments and lack of instructions from the client. The advocate withdrew due to no instructions, leading to an ex-parte disposal of the appeal based on the records submitted.

Issue 2: Taxability of Service Tax
The case involved the appellant rendering services as the operator of customer care to a company and being registered for service tax under Clearing & Forwarding services. The dispute centered around the payment of service tax amounting to Rs. 41,244 for VSAT Allowances & Delivery Charges claimed from the client. The adjudicating authority confirmed the demand, appropriated the amount already paid, and imposed penalties under various sections of the Finance Act. The Commissioner (Appeals) upheld the decision, leading to the present appeal.

Issue 3: Confirmation of Demand and Penalty Imposition
The Legal Advisor reiterated the findings of the adjudication order and the Commissioner (Appeals) order, emphasizing that the deductions claimed by the appellant were not reimbursable and therefore liable for service tax. The Tribunal examined the grounds of appeal, finding that the functions of the appellant made them liable for service tax on the gross amount received from the client. Relying on previous decisions and court rulings, including the Supreme Court, the Tribunal upheld the demand, stating that the contract's primary objective determined the tax liability, and vivisection of the amount for tax purposes was not permissible. Consequently, the appeal was dismissed, and the impugned order was upheld.

This detailed analysis of the judgment showcases the issues involved, the arguments presented, and the Tribunal's reasoning leading to the final decision.