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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 ..... t 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 charges, etc. (d) Accordingly, a Show Cause Notice dated 2-4-2007 proposing recovery of service tax of Rs. 53,90,080/- short paid for the period from April 2003 to March 2006 on the C & F services rendered by them along with interest and proposing imposition of penalty was issued. (e) The original authority, by order dated 28-12-2007, confirmed the demand as proposed and imposed penalty of equal amount under Section 78 in addition to penalties under Sections 76 & 77. 2.1 The Tribunal (Referral Bench), while hearing the appeal noted, the decisions of the Tribunal in the following cases holding that reimbursement charges should not form part of the gross value for the discharge of service liability. (i) Sri Sastha Agencies Pvt. Ltd. v. Asst. Commissioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 the provisions relating to valuation of taxable services under the Finance Act, 1994, 1996, 1997, 1998, 2001, 2002, 2003 & 2006, he submits that the value of taxable service is defined as "gross amount charged for the services rendered". Also referring to the provisions relating to valuation in terms of Service Tax Rules, 1994, he submits that the gross amount charged by the service provider should be only "for such services" and not other amounts which may be recovered as reimbursement of expenses incurred for other activities. In this regard, he submits that certain activities like loading & unloading became taxable under Cargo Handling Service with effect from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 Enterprises v. CCE [2008 (9) S.T.R. 19] (xiii) Alathur Agencies v. CCE [2007 (7) S.T.R. 402] (xiv) B.S. Refrigeration Ltd. v. CCE [2006 (4) S.T.R. 103] (xv) Rolex Logistics P. Ltd. v. CST [2009 (13) S.T.R. 147] 4.1 Learned Jt. CDR referring to provision of Section 67 of the Finance Act, 1994 during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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. The issue is covered in assessees' favour. Hence the stay applications and appeals are allowed in terms of the above judgments with consequential relief if any." (e) D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tement 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 with Service Tax Rules, 2006 came into effect, yet the main provision still remains and provides when the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 charges levied by the Port Trust to the Prot Trust, paying the fee for testing to the Testing Organi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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