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TMI Blog2017 (11) TMI 1573X X X X Extracts X X X X X X X X Extracts X X X X ..... ion - The facts of the present case along with connected documentary evidences are to be examined - the findings of the ld. Member (J) with reference to remand of the matter to the Original Authority is correct - the amounts claimed to be re-imburseable expenses can be excluded from the assessable value subject to verification of the agreements between the appellant and the banks and the supporting documents like invoices, etc to be submitted by the appellant. Time limitation - Whether the extended period of limitation has been rightly invoked as held by ld. Member (Technical) or the demand is barred by limitation as held by ld. Member (Judicial ) and as such, the appeal is to be allowed in toto, on the said disputed issue? - Held that: - Admittedly, the appellants maintained records of all the expenses and the present demand was based on such records. In such situation, I find that the demand cannot be invoked by alleging willful misstatement, fraud and intention to evade payment of tax. Here, the extended period was invoked on the ground that the information was not disclosed to the Department. When there is a bonafdide doubt based on the interpretation of the legal provisions, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant is eligible the benefit under Section 80. In support, appellant relies on following judgements: (a) Hindustan Steel Vs. State of Orissa - 1978 (2) ELT 159 (SC). (b) Smita Shetty Vs. CCE - 2003 (156) ELT 84 (Bang.-CESTAT). (c) Flying Man Air Courier Pvt. Ltd. Vs. CCE - 2006 (3) STR (Tri.-Del.) (vii) No penalty is imposable under Section 78 since there is no suppression of facts. 5. The ld. AR reiterates the findings of the lower Revenue authorities. 6. We find that the impugned order passed by Commissioner (Appeals) inter alia on its pages 4 to 6 has observed as under : "I have also gone through the provisions Rule 5(2) of Service Tax (Determination of Value) Rules, 2006 and the various decisions. In the instant case the appellant is acting as recovery agent for various Banks. The activity is to recover the amount of loan from defaulters. To perform and execute above work of recovery agent the appellants have made a notice of an advertise in the Newspaper, make travelling to the destination of defaulter to perform recovery and to ascertain the property so that it can be seized if required, take help of police escort, provide security of property seized etc. in othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank and at the same time availed credit of service tax paid against such input service. In view of this factual position, it cannot be argued that expenses incurred towards such input service (Reimbursable) cannot form the part of taxable value. In view of the above, I find that the circulars and decisions relied by the appellant are not relevant to the present case and the amount reimbursed by the bank is a part of taxable value. I hold accordingly." 6.1 In addition to above observations in the impugned order, we find that the appellant has not been able to prove that the subject expenses do not pertain to the items/activities services which are not integrally linked with their main activity/service of recovery agent. Without the subject items/activities for which the appellant has taken reimbursement from the clients the activity of recovery agent cannot be performed by them. The fact of reimbursement of expenses for the subject items/activities by the clients cannot make any difference to the conclusion that the expenses incurred on various items like security guards, police escorts, videography charges and so on are integrally linked with the appellant's service of recovery ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in para 7.1 above within three months of receipt of order after giving an opportunity of personal hearing and that of production of documents to the appellant. 9. The appeal decided in above terms. (Pronounced in Court on.................................) (Archana Wadhwa) Member (Judicial) (Ashok K. Arya) Member (Technical) Per Archana Wadhwa: 10. After having gone through the order proposed by my Ld. Brother I proceed to record separate findings. 11. As already observed in the proposed order, appellants are engaged in the business of providing services of recovery agent to various Nationalised Banks since 1988. The service of recovery agents were brought under the service tax net w.e.f. 01.05.2006, for which purpose the appellant procured registration from their Jurisdictional Service Tax Department. 12. During providing services the appellant incurred certain expenditures like Parking charges, arrangement of security guards, Insurance premium, videography, police escorts, paper publication etc. According to the appellant they have entered into an agreement with their bank for reimbursement of such expenses, on actual basis. 13. Issue involved is as to whether such exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrying out "such services", for which they are being paid by the bankers or the other financial institutions. They have to undertake the other expenses for which the banks have agreed to re-pay the same. In other words, it can be observed that instead of the appellant making the travel arrangements or arranging the police escorts or the security guards, etc. the same could have been provided by the banks itself, in which case, the appellant would be under no obligation to incur expenses and to seek reimbursement. As such, as far as the legal issue is concerned, I am of the view that the said decision of the Delhi High Court which seems to have escaped the attention of my Ld. Brother Shri Ashok K. Arya while passing the order, squarely covers the issue in favour of the appellant. 16. However, I find that though the appellants have stated in their memo of appeal about the agreement between them and the bankers as regards the reimbursement of such expenses, as also for scrutiny of the invoices the same is required to be examined by the lower authorities for which purpose the matter may be remanded. 17. In any case and in any view of the matter, I find that the entire demand is hit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Division Bench on certain aspects. The brief facts of the case are that the appellant is in the business of providing services as "Recovery Agent" to various nationalized banks for the past many years. The services rendered by them were subjected to service tax w.e.f. 1.5.2006. One of the disputes involved in the present appeal is relating to valuation of the taxable services provide by the appellant. The difference of opinion also is only with reference to such valuation and question of limitation. 2. During the course of providing services as "Recovery Agent" to the client banks, the appellants incurred certain expenditure like parking charges, arrangement of security guards, insurance premium, videography, police escorts, publication in newspaper, etc. The appellant claimed that in terms of the agreement with the banks, these are reimbursed on actual basis. Hence, these expenses are not to be included in the value for service tax purposes. The appellant claimed that in terms of Rule 5 (2) of Service Tax (Determination of Value ) Rules, 2006, the expenditure incurred by the service provider as a „pure agent‟ of the recipient of the services is excludible from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lhi High Court in Intercontinental Consultants & Technocrafts Pvt. Ltd. - 2013 (29) STR 9 (Delhi) has not been considered, before a decision is arrived at by the ld. Member (T). The Hon‟ble Delhi High Court held that the rule 5 (1) of the Valuation Rules 2006 is ultra virus of the substantive legal provisions of Section 67 and 68 of Finance Act, 1994. The High Court was dealing with similar reimburseable expenditure regarding travel or accommodation. The facts of the present case along with connected documentary evidences are to be examined in line with the observation of the Tribunal in Shree Bhagvathy Traders (supra) and Hon‟ble Delhi High Court in Intercontinental Consultants & Technocrafts Pvt. Ltd. (supra). This can be done by the Original Authority for a fresh decision. As such, the findings of the ld. Member (J) with reference to remand of the matter to the Original Authority is correct. 7. Regarding the question of limitation, I note that the period involved is 1.5.2006 to 31.3.2009 and the notice was issued on 8.10.2010. Here, I note that the includibility or otherwise of expenditure incurred during the course of providing of service is an issue which was subj ..... X X X X Extracts X X X X X X X X Extracts X X X X
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