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TMI Blog2011 (8) TMI 430X X X X Extracts X X X X X X X X Extracts X X X X ..... - Shri S.S. Kang, Vice-President, P.G. Chacko, Member (J) and M. Veeraiyan, Member (T) Shri G. Natarajan and K.S. Ramesh, Advocates, for the Appellant. Shri R.K. Singla, Jt. CDR, for the Respondent. ORDER [Order per : M. Veeraiyan, Member (T)]. - By Miscellaneous Order No. 23/2011 dated 18-1-2011, the issue stands referred to the Larger Bench. The facts, in brief, which are relevant to consider the issue afresh are as follows : (a) The appellants are engaged in the business of rendering C F agency services to several persons including M/s. Indian Oil Corporation Ltd. (IOCL for short). (b) Service Tax was imposed on C F agency services with effect from 1-9-1999 and the appellants have taken registration and paying the service tax. (c) The officers, on the basis of investigation, found that the appellants were not paying service tax on the correct taxable value as they were preparing two invoices, one for service charges and another for amounts claimed as reimbursement of expenses incurred towards transportation charges, loading and unloading charges, rent, salary to the staff, electricity, telephone charges, stationery charges, courier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id agreement. He submits that similar agreements have been entered into with other parties during the relevant period. Accordingly, the appellants were preparing separately invoices for reimbursable expenses and they were not including the same in the value for the purpose of paying service tax. 3.2 Ld. Advocate referring to the Board s Circular F. No. B.43/7/1997 TRU dated 11-7-1997, submits that the activities of clearing and forwarding agent are as follows : (i) Receiving the goods from the factories or premises of the principal or his agents; (ii) Warehousing these goods; (iii) Receiving dispatch orders from the principal; (iv) Arranging dispatch of goods as per the directions of the principal by engaging transport on his own or through the authorized transporters of the principal; (v) Maintenance of records or the receipts and dispatch of goods and the stock available at the warehouse; (vi) Preparing invoices on behalf of the principal. He submits that only the gross amounts of remuneration or commission paid to C F Agent by the client shall be the value for the purpose of charging service tax as C F Agent. 3.3 Taking us through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x (Determination of Value Rules, 2006) the consideration is defined to include reimbursement also. 3.6 He relies on the following decision in supports of his submission claiming exclusion of reimbursable expenses from the value of taxable services : (i) Sri Sastha Agencies Pvt. Ltd. v. Asst. Commissioner of C. Ex. Cus, Palakkad [2007 (6) S.T.R. 185 (Tri-bang.)] (ii) Bhagyanagar Services v. CCE, Hyderabad [2006 (4) S.T.R. 22 (Tri-Bang.)] (iii) CCE C ST, BBSR-1 v. M/s. Nilalohita Enterprises [2007-TIOL-680-CESTAT-Kol = 2007 (6) S.T.R. 318 (Tribunal)] (iv) Sangamitra Services Agency v. CCE, Chennai [2007-TIOL-1335-CETAT-MAD = 2007 (8) S.T.R. 233 (Tribunal)] (v) Apco Agencies v. CCE [2008 (10) S.T.R. 169] (vi) S K Enterprises v. CCE [2008 (10) S.T.R. 171] (vii) E.V. Mathai Co. v. CCE [2006 (3) S.T.R. 116 = 2003 (157) E.L.T. 101 (Tribunal)] (viii) Keralam Enterprises v. CCE [2008 (9) S.T.R. 503] (ix) U.M. Thariath Co. v. CCE [2007 (8) S.T.R. 161] (x) Nandhini Warehousing Crop. v. CCE [2007 (8) S.T.R. 511] (xi) Al-Baith Steel P. Ltd. v. CCE [2008 (10) S.T.R. 554] (xii) Jaylaxmi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of E.V. Mathai Co. cited supra is on the fact that there was separate agreement for transportation. (b) Decision dated 16-6-2006 of the Tribunal in the case of B.S. Refrigeration Ltd. is after appreciating the facts that the appellant entered into contract with M/s. BPL who in turn use the services of C F Agent by sub-contracting the work to another party. (c) Decision dated 22-6-2006 (of the Tribunal in the case of Bhagyanagar Services has been rendered after appreciating that there was separate contract for transportation and after relying the decision of the Tribunal in the case of E.V. Mathai Co. (d) Decision dated 6-11-2006 in the case of Shri Sastha Agencies merely follows the decision in the cases of E.V. Mathai Co. and Bhagyanagar Services and reads as under : 6. On a careful consideration, we notice that the issue is covered in assessees favour by the above cited judgments. The elements required for adding to the service tax is restricted to the amounts received by them for carrying on the services of C F only. The other elements like loading, unloading charges are not required to be added to the service tax as held by the cited judgments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e such payment on behalf of the service receiver, they are known as reimbursement. Under these circumstances, abatement of reimbursement of amounts incurred on behalf of the service receiver was allowed to be deducted from the gross amount to arrive at gross amount towards services rendered . 5.6 In the case of Naresh Kumar Co. Pvt. Ltd., the Tribunal after taking into account the provisions of Section 67 of the Act and the provisions of Service Tax (Determination of Value) Rules, 2006, came to the conclusion that the claim for deduction from the gross value of taxable services was not justified. 5.7 Decision of the Tribunal in the case of Agrawal Colour Advance Photo System [2010 (19) S.T.R. 181], relied upon by the department, after considering the provisions of Section 67 and the Service Tax Valuation Rules in the context of exemption Notification No. 12/2003-S.T. and Notification No. 1/2006 dated 1-3-2006 held that the gross amount charged would include the value of the goods and materials supplied or provided or used and the value of inputs services used for providing the taxable services. It was also held that though with effect from 18-4-2006, a new Section 67 read ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l to pay certain amount to any third party and the said amount is paid by the service provider on behalf of the service recipient, the question of reimbursing the expenses incurred on behalf of the recipient shall arise. For example, when rent for premises is sought to be claimed as reimbursement, it has to be seen whether there is an agreement between the landlord of the premises and the service recipient and, therefore, the service recipient is under obligation for paying the rent to the landlord and that the service provider has paid the said amount on behalf of the recipient. The claim for reimbursement of salary to staff, similarly has to be considered as to whether the staff were actually employed by the service recipient at agreed wages and the service recipient was under obligation to pay the salary and it was out of expediency, the provider paid the same and sought reimbursement from the service recipient. 6.3 The various Circulars of the Board relied upon by the learned Advocate for the assessee clearly referred to amounts payable on behalf of the service recipient. For example, the Customs House Agent paying the Customs duty to the Customs Department, paying the charg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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