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TMI Blog2019 (3) TMI 189X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax is to be paid only on the services actually provided by the service provider. There is no dispute, as regards the excludability of reimbursement expenses from the service tax - However, in the instant case the original authority has given a finding that the respondent did not give any bifurcation or prove that these expenses were relating to reimbursement of expenses made by the respondent to their international company in Italy. Allegation was that the balance sheet for the year 2006-07 has shown a lump sum amount of payment by the respondent to their sister concern. No bifurcation was showed - it will be in the interest of justice that the matter goes back to the original authority to calculate the quantum of such payments and de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner appeals has set aside the order-in-appeal. The appellant contend that the department was seeking to collect service tax on the amount paid towards of staff cast, insurance, travelling, conveyance, communication expenses, etc. which are reimbursement expenses. Commissioner (Appeals) has held that in terms of Rule 7(1) of the service tax (determination of value) Rules 2006 the value of taxable service received under the provisions of Section 66A, shall be such amount as is equally to the actual consideration charged for the services provided or to be provided. Commissioner (Appeals) relied upon the judgment and the ratio of the case of Toyota Kerloskar Auto Parts Pvt. Ltd. 2011 (21) STR 583(Tri.-Ban), wherein it was held that servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal and sought to rely upon the case of Bhagwat Traders Vs. CCE, Cochin 2011(24) STR 290 (Tri.-I) Larger Bench, where it was held that concept of reimbursement arises only when person actually being under no obligation to pay and pays amount on behalf of the buyer while recovering the same from the buyers. 5. Learned Counsel for the respondent submitted that learned Commissioner (Appeals) has clearly held that services of conveyance, insurance, travelling, etc. are not provided to respondent but are provided to the subsidiary of the respondent therefore the services are not received in India. Hence, no tax is payable. M/s. Morarji International raises debt notes on the respondent for recovery of such expenses and cannot be included. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t service tax is to be paid only on the services actually provided by the service provider. The Hon ble Supreme Court held that. 21. Undoubtedly, Rule 5 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interpretation is to be given to Section 67, it hardly needs to be emphasised that Rule 5 of the Rules went much beyond the mandate of Section 67. We, therefore, 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 servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h payments and deduct them from the amounts on which service tax is payable. The respondents on their part shall cooperate with the original authority by producing all the documentary evidence they have to prove that the impugned expenses were in the nature of reimbursement of expenses and not a payment for service. 8. In view of the above, we allow the appeal of the Revenue by way of remand to the original authority with a direction to compute the actual service tax liability of the respondent after giving due allowance to the amounts claimed to be reimbursement of expenses. It shall be in the cast of the respondent to submit all the evidence in this regard to the original adjudicating authority. (Pronounced in Court on 28/02/2019) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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