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TMI Blog2017 (5) TMI 1464X X X X Extracts X X X X X X X X Extracts X X X X ..... d had not declared the gross value of taxable services received by them. The assessees received retainer ship fee as well as out-of-pocket reimbursable expenses and they had discharge service tax only on the retainer ship fees. Thereafter, show cause notice dated 13.4.2006 was issued proposing to recover service tax to the tune of Rs. 24,31,949/- along with interest and to impose penalties. After due process of law, the original authority confirmed the service tax demand along with interest and imposed penalties under section 76 and 78 of the Finance Act, 1994. The assessees filed appeal before Commissioner (Appeals) and vide impugned order, the Commissioner (Appeals) upheld the demand along with interest, however, set aside the penalty imposed under section 76. Being aggrieved by the confirmation of demand, interest as well as penalty imposed under section 78 of the Finance Act, the assessees are now before the Tribunal. The department has filed Appeal No.ST/51/2007 against the impugned order setting aside the penalty imposed under section 76 of the Finance Act. 3. On behalf of the assessee, learned counsel Shri Mohammed Rahim reiterated the grounds of appeal and in particular ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in the gross value of taxable services and the judgment in the case of Intercontinental Consultants & Technocrats (supra) relied upon by the learned counsel for the assessee has been appealed by the department before the Hon'ble Supreme Court and the same has been admitted as reported in 2014 (35) STR J99 (SC). 4.2 The learned AR also relied upon the decision in the case of Commissioner of Central Excise Vs. Sanfin 2009 (13) STR 551 (Tri. Kol.) wherein the Tribunal has relied upon the decision in the case of Malabar Management Services (supra). The decision of the Tribunal in the case of Malabar Management Service, which is in favuor of the assessees, has also been appealed by the Department before the Hon'ble Supreme Court reported as 2010 (19) STR J16 (SC). 5. We have heard the submissions made by both sides. On perusal of the judgment cited before us, we understand that the issue whether reimbursable out-of-pocket expenses has to be included in the gross value of taxable services is now pending before the Hon'ble Supreme Court. However, as per the judgment in the case of Intercontinental Consultants & Technocrats (supra), the Hon'ble High Court of Delhi has held in favour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Central Government shall be laid before each House of Parliament and that the House has the power to modify the rule. As pointed out by the Supreme Court in Hukam Chand v. Union of India, AIR 1972 SC 2427 :- "The fact that the rules framed under the Act have to be laid before each House of Parliament would not confer validity on a rule if it is made not in conformity with Section 40 of the Act. Thus Section 94(4) does not add any greater force to the Rules than what they ordinarily have as species of subordinate legislation." 6. We also take note of the fact that the coordinated Bench of the Tribunal in the case of Bhaven Desai (supra) has also analyzed and discussed the very same issue with respect to another service provider to the very same service recipient / ABN Amro Bank and held that reimbursable out-of-pocket expenses need not be included in the gross value of taxable services. The relevant portion of the order is extracted herein below:- "11. M/s. Baven Desai has claimed that the remuneration received by them for rendering taxable service, in accordance with the agreement, is a per mensem amount of Rs. 40,000 and that tax has been discharged on this amount. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been, the peculiarity of the banking sector since it first came into being. M/s. Baven Desai, notwithstanding its credibility within its circle, cannot pretend to provide institutional credibility to its client in relation to the financial products of the latter. While M/s. Baven Desai may undertake to popularize the products amongst the populace, the potential customer will look for the symbols of the client as the sole reassurance in relation to the offerings. Further, the industry in which the client, M/s. ABN Amro Bank, operates is subject to rigorous regulation in the number of branches that it can operate. An existing service provider may, additionally, be required to operate a front office of the client to reinforce the credibility of the financial products. These may be mandates of the client for which the client may have to make a separate payment - whether these are for actuals or on lump sum is a matter of commercial agreement. To the extent that compliance with these mandates are liable to be classified only within services that are as yet not taxable, it would be contrary to legislative sanction to determine tax liability on such receipts. The confirmation of demand, a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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