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TMI Blog2018 (9) TMI 1717X X X X Extracts X X X X X X X X Extracts X X X X ..... ng service tax. In the case on hand, the lower authorities have solely relied upon Rule 5 of the Service Tax Rules, 2006 to say that any expenditure or cost incurred by the service provider in the course of providing taxable service of such expenditure or cost shall be treated as consideration which shall be included in the value for the purposes of charging service tax and this was in terms of Section 67 of the Finance Act which prescribed the value of payment of service tax which is on the gross amount by the service provider - the findings of the lower authorities are clearly incorrect and same is not sustainable. Appeal allowed - decided in favor of appellant. - Appeal No. ST/00342/2011 - Final Order No. 42275/2018 - Dated:- 13- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department Representative for the Revenue. 3. The submissions of Ld. Advocate for the assessee could be broadly summarized as below: (i) The appellant received remuneration in the form of fixed commission of ₹ 8,000/- per month in terms of C G agreement, (ii) The remuneration was increased to ₹ 10,500/- for the subsequent period i.e. 01.08.2005 to 31.03.2006, (iii) The other receipts are only the reimbursement of expenses towards transportation charges, loading or unloading charges, maintenance and gardening, which are not taxable, (iv) The appellant had even paid service tax for the period 2006-07 under protest at the instance of the Revenue, (v) Reliance is placed on the following decisions : a. Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Rules, 2006 brings within its sweep the expenses which are incurred while rendering the service and are reimbursed, that is, for which the service receiver has made the payments to the assessees. As per these Rules, these reimbursable expenses also form part of gross amount charged . Therefore, the core issue is as to whether Section 67 of the Act permits the subordinate legislation to be enacted in the said manner, as done by Rule 5. As noted above, prior to April 19, 2006, i.e., in the absence of any such Rule, the valuation was to be done as per the provisions of Section 67 of the Act. 22 . Section 66 of the Act is the charging Section which reads as under: there shall be levy of tax (hereinafter referred to as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, find that High Court was right in interpreting Sections 66 and 67 to say that in the valuation of taxable service, the value of taxable service shall be the gross amount charged by the service provider for such service and the valuation of tax service cannot be anything more or less than the consideration paid as quid pro qua for rendering such a service. 25. This position did not change even in the amended Section 67 which was inserted on May 1, 2006. Sub-section (4) of Section 67 empowers the rule making authority to lay down the manner in which value of taxable service is to be determined. However, Section 67(4) is expressly made subject to the provisions of sub-section (1). Mandate of sub-section (1) of Section 67 is mani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance Act, 2015 with effect from May 14, 2015, whereby Clause (a) which deals with consideration is suitably amended to include reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service. Thus, only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax. Though, it was not argued by the Learned Counsel for the Department that Section 67 is a declaratory provision, nor could it be argued so, as we find that this is a substantive change brought about with the amendment to Section 67 and, therefore, has to be prospectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... something today, we do it keeping in view the law of today and in force and not tomorrow s backward adjustment of it. Our belief in the nature of the law is founded on the bedrock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset. This principle of law is known as lex prospicit non respicit: law looks forward not backward. As was observed in Phillips v. Eyre [(1870) LR 6 QB 1] , a retrospective legislation is contrary to the general principle that legislation by which the conduct of mankind is to be regulated when introduced for the first time to deal with future acts ought not to change the character of past transactions carried on up ..... X X X X Extracts X X X X X X X X Extracts X X X X
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