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TMI Blog2024 (6) TMI 500X X X X Extracts X X X X X X X X Extracts X X X X ..... sable expenses are collected by the appellant as pure agents. In the accounts of appeal, the review contended that there is no indication in the order in which the adjudicating authority has cross-verified the Chartered Accountants Certificate with primary documents such as bills, invoices and other relevant records. There is no reason to doubt the genuineness of the certificate issued by the Chartered Accountants. Thus, there is no infirmity in the order passed by the land adjudicating authority by relying on the certificate issued by the Chartered Accountants. The demand dropped in the impugned order is upheld - the adjudicating authority has rightly dropped the demand on the basis of the impugned order on this court - appeal dismissed. - HON BLE SHRI ASHOK JINDAL, MEMBER (JUDICIAL) And HON BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL) Shri S.S. Chattopadhyay, Authorized Representative for the Appellant Shri Avijit Biswas, Advocate for the Respondent ORDER Order: [PER SHRI K. ANPAZHAKAN] The present appeal has been filed by the Revenue against the Order-in-Original No.42/Comm/ST/KOL/2014-15 dated 08.07.2014 and the Addendum dated 18.07.2014, passed by Commissioner of Service Tax, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he material period, service tax was to be paid on receipt basis and the Respondent had correctly paid service tax and filed ST-3 returns on the basis of gross amount received by them during the respective financial years. Accordingly, the adjudicating authority dropped the demands raised in the Show Cause Notice on this count also. 3. Regarding the dropping of the demand on the 'reimbursable expenses' collected by the Respondent as 'Pure Agents', the Revenue contends that the ld. adjudicating authority has relied upon the Chartered Accountant Certificate dated 25.04.2013 furnished by the Respondent without any verification; that the ld. adjudicating authority has not considered certain amounts of taxable value which were received from the developers of SEZ; the ld. adjudicating authority has blindly accepted the Chartered Accountant Certificate and has come to the conclusion that the Respondent has fulfilled the requirement of Rule 5 of Service Tax (Determination of Value) Rules, 2006 and the conditions stipulated in the Circular No. 119/13/2009-ST dated 21.12.2009. 3.1. The contention of the Revenue is that the Respondent has failed to prove themselves as 'Pure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipt basis. However, the Balance sheet and Profit Loss account were prepared on accrual basis. Since the demand of service tax has been quantified on the basis of bank statements, the service tax has been demanded on the differential amount. Since they have correctly paid the service tax on the charges received during the respective financial years, he submits that the demand dropped by the ld. adjudicating authority in the impugned order is proper. 4.2. The Respondent also relied upon the decision of the Hon ble Supreme Court in the case of Union of India v. Intercontinental Consultants and Technocrats Pvt. Ltd. [2018 (10) G.S.T.L. 401 (S.C.), wherein it has been held that 'reimbursable expenses' collected as 'Pure Agents' are not includable in the assessable value for the purpose of demanding service tax. 5. Heard both sides and perused the appeal documents. 6. We observe that the impugned order has dropped the demands raised in the Notice under two major categories. (i) Dropping of the demand of Service tax on the 'reimbursable expenses' collected by the Respondent as 'Pure Agents'. (ii) Dropping of the demand of service tax on the difference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssees. 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 the service tax) @ 12% of the value of taxable services referred to in sub-clauses of Section 65 and collected in such manner as may be prescribed. 23. Obviously, this Section refers to service tax, i.e., in respect of those services which are taxable and specifically referred to in various sub-clauses of Section 65. Further, it also specifically mentions that the service tax will be @ 12% of the value of taxable services . Thus, service tax is reference to the value of service. As a necessary corollary, it is the value of the services which are actually rendered, the value whereof is to be ascertained for the purpose of calculating the service tax payable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l established principle that Rules are framed for achieving the purpose behind the provisions of the Act, as held in Taj Mahal Hotel : the Rules were meant only for the purpose of carrying out the provisions of the Act and they could not take away what was conferred by the Act or whittle down its effect. 29. In the present case, the aforesaid view gets strengthened from the manner in which the Legislature itself acted. Realising that Section 67, dealing with valuation of taxable services, does not include reimbursable expenses for providing such service, the Legislature amended by Finance 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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