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TMI Blog2010 (11) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... il on the law relating to service tax. Legislature accordingly intend that the gross value of the service shall be the measure of value for taxation whether paid as consideration directly or by reimbursement of expenses relating to providing of taxable service - 142 of 2008 - ST/102/2010 - Dated:- 25-11-2010 - Appellant Represented by: Shri Sumit Kumar, DR Respondent Represented by: None CORAM: D N Panda, Member (J) Rakesh Kumar, Member (T) Per: D N Panda: None present for the respondent. Revenue being aggrieved by the order passed by the learned Commissioner holding that the expenses reimbursed by the respondent shall not from part gross value of taxable service came up in appeal before Tribunal. 2. Learned DR Shri Sumit Kumar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orm an act, shall essentially make value addition to the service. Therefore, the first Appellate order calls for interference to reverse the same. 3. With the assistance of Revenue and in absence of the respondent, we thoroughly looked into the appellate order, which is subject matter of appeal before Tribunal. Learned Commissioner (Appeals) in para 4 of the order has brought out the elements of cost which were sought to be included to the value of service provided. Those were charges for infrastructure i.e. godown rent, depreciation, pest control, fire extinguisher, internet, house keeping and staff welfare, telephone expenses, courier expenses, tax, electricity including generator expenses, samples and promotion materials handling charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd inevitably incurred to make the economic service performable that contribute to the gross value of service. The provider of economic service recovers his entire cost involved in providing such service in the best possible manner that may be viable to him and the service recipient. 5. The basic principle that service tax being destination based consumption tax, till the service reaches its destination, that contributes to the proposition that all expenses incurred till that point and time become essential consideration of cost of service. Agreement of parties in respect of modality of payment of valuable consideration towards service provided does not matter for Revenue. In whatever manner the recipient and provider of taxable service a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is on commercial activities and is not a charge on the business but on the consumer and it would, logically, be leviable only on services provided within the country. Service tax is a value added tax. 8. As stated above, service tax is VAT. Just as excise duty is a tax on value addition on goods, service tax is on value addition by rendition of services. Therefore, for our understanding, broadly "services" fall into two categories, namely, property based services and performance based services. Property based services cover service providers such as architects, interior designers, real estate agents, construction services, mandapwalas etc.. Performance based services are services provided by service providers like stock-brokers, practicin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a value added tax. The value addition is on account of the activity which provides value addition, for example, an activity undertaken by a chartered accountant or a broker is an activity undertaken by him based on his performance and skill. This is from the point of view of the professional. However, from the point of view of his client, the chartered accountant/broker is his service provider. The value addition comes in on account of the activity undertaken by the professional like tax planning, advising, consultation etc. It gives value addition to the goods manufactured or produced or sold. Thus, service tax is imposed every time service is rendered to the customer/client. This is clear from the provisions of Section 65 (105) (zm) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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