2018 (9) TMI 1593 - AT - Service Tax

Valuation - inclusion of reimbursable charges such as CFS charges, steamer agent charges, transport expenses etc. in the taxable value for the purpose of payment of service tax - Held that - When department alleges specifically that the amount collected is reimbursable expenses, then at no stretch of imagination can the amount collected by appellant be considered as consideration for the service - On the issue whether the reimbursable expenses are to be included in the taxable value for discharging the service tax, the decision of Hon ble Apex Court in the case of Intercontinental Consultants & Technocrats 2018 (3) TMI 357 - SUPREME COURT OF INDIA would squarely apply, where it was held that only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether reimbursable expenses are includable in the taxable value for the purpose of service tax under Custom House Agent Service.

Analysis:
The case involved the appellant, a Custom House Agency Service provider, who raised two types of invoices - one for service charges and the other for reimbursement of expenses like CFS charges, steamer agent charges, and transport expenses. The Department issued a show cause notice alleging that the reimbursable charges were not included in the taxable value for service tax payment. The original authority confirmed the demand along with interest and imposed a penalty under Section 78 of the Finance Act, 1994.

The appellant argued that the issue of including reimbursable expenses in the taxable value was settled by the Honorable Apex Court in a specific case. The Department, represented by the ld. AR Ms. Usha Devi, contended that the charges were not reimbursable expenses and the case law cited by the appellant was not applicable to the facts of this case.

After hearing both sides, the Tribunal noted that the show cause notice specifically alleged that the amount collected by the appellant was reimbursable expenses. The Tribunal relied on the decision of the Honorable Apex Court in a similar case and concluded that if the department alleges that the amount collected is reimbursable expenses, then it cannot be considered as consideration for the service. Therefore, the Tribunal held that the demand to include reimbursable expenses in the taxable value for service tax was not sustainable. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.

In conclusion, the Tribunal's decision clarified the treatment of reimbursable expenses in the taxable value for service tax purposes under Custom House Agent Service, emphasizing the importance of specific allegations and legal precedents in determining the tax liability in such cases.