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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 ..... 2. Brief facts of the case are that the assessees are engaged in rendering service such as promotion / marketing of various loans given by M/s. ABN Amro Bank. The department was of the view that the services rendered by the assessees would fall within the ambit of Business Auxiliary Service. The officers of the department visited the premises of the assessee on 2.9.2004 and gathered evidence. It came to the notice of the department that assessees were suppressing the value of taxable services and 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 ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se notice as well as the adjudication order, he submitted that the assessee did not declare the reimbursable out-of-pocket expenses in the returns and the same has come to light only on the intervention of the Department after search conducted in the premises of the assessee. The assessee, therefore, are guilty of suppression of facts and the show cause notice issued invoking extended period of limitation is right and proper. 4.1 On merits, learned AR submitted that the reimbursable out-of-pocket expenses is also to be included 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the charging Section, but it seeks to extract something more from him by including in the valuation of the taxable service the other expenditure and costs which are incurred by the service provider in the course of providing taxable service . What is brought to charge under the relevant Sections is only the consideration for the taxable service. By including the expenditure and costs, Rule 5(1) goes far beyond the charging provisions and cannot be upheld. It is no answer to say that under sub-section (4) of Section 94 of the Act, every rule framed 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 cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r taxable service cannot be presumed to confer authority to tax other amounts received from the same entity for services unknown. That would not be a tax on services but a tax on receipts which is not the legislative intent or objective of taxing services. 14. To ascertain the quid pro quo for the consideration, facts and circumstances of the transaction must be comprehended. The client. M/s. ABN Amro Bank, offers financial products for a customer base spread across the country. The provenance of such products should visibly be linked to the financial institution; that is, and has 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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