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TMI Blog2019 (12) TMI 890X X X X Extracts X X X X X X X X Extracts X X X X ..... 019 (2) TMI 774 - KERALA HIGH COURT] , relied upon by learned counsel for the respondent, fails to advance the case of the respondent. The Kerala High Court was dealing with a situation prior to amendment of Section 67 of the Act effected on 01.05.2006, whereas, in the present case we are considering the case of the appellant after the amendment - Hence, the service provider (appellant) was liable to be charged service tax qua service rendered by him and the valuation of taxable service could not be anything more or less than the consideration paid for rendering such a service. Appeal allowed. - D. B. Central Excise ( Service Tax ) Appeal No. 134/2018 - - - Dated:- 14-12-2019 - HON'BLE MRS. JUSTICE SABINA And HON'BLE MR. JUSTICE NARENDRA SINGH DHADDHA For the Appellant : Mr. Sameer Jain with Mr. Daksh Pareek and Mr. Arjun Singh. For the Respondent : Mr. Siddharth Ranka. JUDGMENT Appellant has filed this appeal challenging part of order dated 20.03.2018 passed by Customs Excise and Service Tax Appellate Tribunal, New Delhi (hereinafter referred to as the Tribunal ), whereby, appeal of the appellant with regard to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in confirming the demand on merits on the amount towards Provident Fund (PF), ESI, Salaries paid to Labour on actuals as re-imbursements, which was contrary to provisions of section 67 of the Finance Act and Apex Court judgment reported in 2018 (10) GSTL 401 (SC) by passing a nonspeaking order violating the principles of natural justice? The facts in the present case are not in dispute. The question involved in the present case is purely legal. Admittedly, appellant is engaged in providing manpower to his clients. Para 6 of the show cause notice dated 27.09.2012 (Annexure-1) reads as under: 6. Whereas, as per provisions of Section 67 of the Finance Act, 1994, the gross amount charged for the taxable service shall include any amount received towards the taxable service before, during and after provision of such service. In terms of Rule 5 of the Service Tax (Determination of Value) Rules, 2006, where any expenditure or cost incurred by the service provider in the course of providing taxable service, all such expenditure or costs shall be treated as consideration for the taxable service provided or to be provided and shall be included in the value for the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed demand is barred by limitation of time. We find that the service tax demand has also been confirmed within the normal period of limitation, which according to our opinion, should be paid by the appellant. We also find that non-payment of service tax by the appellant was due to the bonafide belief that same was not payable by the appellant. Thus, Section 80 of the Act, in this case, can be invoked for non-imposition of penalties under Section 76 and 78 of the Act. 7. In view of above, we partly allow the appeal to the extent of setting aside the impugned order, so far as it confirmed the adjudged demand beyond the normal period of limitation. The penalties imposed in the said order is set aside. Thus, controversy involved in the present case relates to short payment of service tax for the financial year 2011-12. So far as Rule 5 of the Rules dealing with inclusion in or exclusion from value of certain expenditure or costs, is concerned, the same came up for consideration before the Hon ble Apex Court in Union of India Vs. Intercontinental Consultants and Technocrats Pvt. Ltd. (supra) and it was held as under: 12. It was further submitted that S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax on reimbursed expenses as Section 67 of the Act did not provide for such an inclusion. Mr. Mittal also referred to para 2.4 of Circular/Instructions F. No. B-43/5/97-TRU, dated June 6, 1997 wherein it is clarified that ...various other reimbursable expenses incurred are not to be included for computing the service tax . xxxxxxxxx 20. We have duly considered the aforesaid submissions made by the Learned Counsel for the Department as well as the counsel for the assessees. As can be seen, these submissions are noted in respect of Civil Appeal No. 2013 of 2014 where the assessee is providing consulting engineering services . In other appeals, though the nature of services is somewhat different, it doesn t alter the colour of legal issue, in any manner. In the course of providing those services, the assessees had incurred certain expenses which were reimbursed by the service recepient. These expenses were not included for the purpose of valuation, while paying the service tax. Thus, the question for determination which is posed in Civil Appeal No. 2013 of 2014, answer to that would govern the outcome of the other appeals as well. Still, for the sake of comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Pinnacle Share Registry Pvt. Ltd. Period: 1-5-2006 31- 3-2008 Demand: ₹ 13,83,479 Reimbursement of Expenses, out of pocket expenses, Postage expenses C. Custom House Agent covered by head Clearing and Forwarding Agent prior to 18-4-2006. Procedure of raising two sets of invoices for reimbursement of various expenses and for service/agency charged separately started after introduction of Service Tax on CHA s (w.e.f. 15-6-1997) in view of Circular dated 6-9-1997. Invoice issued for services/agency charges alone is used for payment of Service Tax. SI.No. Civil Appeal details Facts Reimbursable claimed as not includible 1. 295-299/2014 CST v. Asshita International Period: 1-10-2003 31-3-2008 [pre and post coming into effect of the impugned Rule 5] Demand: 4,66,607/- SCN dated 21-4-2009. O-I-A dated 30-11- 2010 [pages 238-259] set aside demand prior to 18-4-2006 in view of circular dated 6-6- 1997. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 31- 7-2013 set aside demand for the period 18-4-2006 31-3-2008 in view of circular dated 6-6-1997. Customs Examination Charges, Misc. Expenses, Sundry expenses, strapping and restrapping charges, documentation charges. 7 7685/2014 Comm. of Customs v. Ramdas Pragji Forwarders Pvt. Ltd. Period: 2004-05 2007-08 The Adjudicating Authority held that no Service Tax was payable on reimbursable amount prior to 18-4- 2006. The Circular dated 6-6-1997 lost its validity after introduction of Rule 5. Hence the ST was recoverable thereafter CMC charges, CON-COR, GSEC, Transportation charges, Air and sea freight, Custom Duty, Custom Cess, fumigation charges, bottom paper, wooden etc. handling charges, labour expenses, sundry charges, airport charges, documentation charges, photocopying charges etc. [page 181-182] 8 T.P.(C) 1932- 1934/2017 CST v. Green Channel Cargo Care Period: April, 2006- March, 2009 Harbour/Airport Authority of India/CFS/CCTL and deliv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 223-10224/2017 CCE ST v. Mehrotra Buildcom Period: Apr., 2009 to Jan., 2010 February, 2010 to September, 2010 Demand: ₹ 21,48,835/- + ₹ 18,06,655/- Value of diesel oil supplied free of cost 8. 5444/2017 CCE ST v. Mehrotra Buildcom Not available Value of diesel oil supplied free of cost E. SI.No. Civil Appeal details Facts Reimbursable claimed as not includible 1. 10626-10627/2017 Period: Apr., 2004 to Mar., 2006 [prior to coming into effect of impugned Rule 5 on 1-6-2007] Demand: ₹ 24,70,790/- SCN dated 22-10-2008 Non-payment of Service Tax on the amount received as reimbursement by way of debit notes in addition to amount charged through invoices for providing Event Management Service , Section 65(40) and Section 65(90)(zu) [page83] Hiring of venue, merchandise, artists, travel, courie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 prospective in nature. On this aspect of the matter, we may usefully refer to the Constitution Bench judgment in the case of Commissioner of Income Tax (Central)-I, New Delhi v. Vatika Township Private Limited [(2015) 1 SCC 1] wherein it was observed as under: 27. A legislation, be it a statutory Act or a statutory rule or a statutory notification, may physically consists of words printed on papers. However, conceptually it is a great deal more than an ordinary prose. There is a special peculiarity in the mode of verbal communication by a legislation. A legislation is not just a series of statements, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid legal position clearly emerges from the various decisions and this legal position was conceded by the counsel for the parties. In any case, we shall refer to few judgments containing this dicta, a little later. Thus, controversy involved in the present case duly stands answered by the decision of the Hon ble Apex Court as reproduced above and the judgment of the Division Bench of Kerala High Court in Security Agencies Association (supra), relied upon by learned counsel for the respondent, fails to advance the case of the respondent. The Kerala High Court was dealing with a situation prior to amendment of Section 67 of the Act effected on 01.05.2006, whereas, in the present case we are considering the case of the appellant after the amendment. Hence, the service provider (appellant) was liable to be charged service tax qua service rendered by him and the valuation of taxable service could not be anything more or less than the consideration paid for rendering such a service. Hence, substantial question of law framed in this appeal stands answered accordingly. Keeping in view the decision of the Hon ble Supreme Court in Union of India Vs. Intercontinental ..... X X X X Extracts X X X X X X X X Extracts X X X X
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