2017 (12) TMI 773 - AT - Service Tax

Valuation - includibility - certain expenses towards rent, loading and unloading etc. incurred by the appellant during the course of their service to the client - C&F Agent service - Held that - any expenses incurred by such agent and reimbursed as per contractual agreement, on actual basis cannot form part of the taxable value on C & F agent service - The Original Authority categorically recorded that all these expenses are incurred and reimbursed on actual basis and we find no reason to vary the finding recorded by the Original Authority - appeal allowed - decided in favor of appellant.

Summary

Issues: Valuation of C & F Agency service - Addition of expenses towards rent, loading, and unloading in taxable value.

In the judgment by the Appellate Tribunal CESTAT NEW DELHI, the case involved a dispute regarding the addition of certain expenses towards rent, loading, and unloading in the taxable value of C & F Agency services provided by the appellants. The Original Authority had initially dropped the proceedings against the appellant, stating that the expenses incurred by the appellant and reimbursed by the principal company are not connected to taxable activities of clearing and forwarding operations. The Commissioner, however, passed an order adding these expenses to the taxable value. The appellant contested this revision order, leading to the present appeal.

Upon hearing the arguments from the Revenue's legal representative and examining the appeal records, the Tribunal noted that the Original Authority had correctly evaluated the factual and legal aspects of the case. The Original Authority found that the expenses reimbursed to the appellant were not to be considered for service tax valuation, as they were incurred and reimbursed on an actual basis as per the contractual agreement. The Tribunal agreed with the Original Authority's findings, citing established principles upheld by the Tribunal and various High Courts regarding the valuation of C & F Agent services. It was concluded that expenses reimbursed on an actual basis cannot be included in the taxable value of C & F Agent services. Therefore, the impugned order was set aside, and the original order was restored, resulting in the appeal being allowed.

In summary, the judgment focused on the correct valuation of C & F Agency services, specifically addressing the addition of expenses towards rent, loading, and unloading in the taxable value. The Tribunal upheld the principle that expenses reimbursed on an actual basis, as per contractual agreements, should not be included in the taxable value of such services, as they are not connected to the taxable activities of clearing and forwarding operations.