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TMI Blog2024 (10) TMI 902X X X X Extracts X X X X X X X X Extracts X X X X ..... s of Section 67 of the Finance Act, 1994, service tax is to be levied on the consideration for the services rendered and not for any reimbursement of expenses particularly paid to third parties. Moreover, it is found that the show cause notice does not dispute the nature of the reimbursed expenses and their includibilty; the show cause notice merely avers that the said assessee evaded payment of service tax including education cess on the reimbursed expenses from its subsidiaries in spite of numerous letters issued to them. The appellant has raised that the objection that services rendered by the appellant fall under Business Support Services and not under Management Consultancy Services - the plea has no relevance to the impugned proceedings as the same was not subject matter of the impugned case. Appeal allowed. - HON BLE Mr. S. S. GARG , MEMBER ( JUDICIAL ) And HON BLE Mr. P. ANJANI KUMAR , MEMBER ( TECHNICAL ) Sh. Jitendra Motwani , Advocate for the Appellant Sh. Siddharth Jaiswal and Sh. Aneesh Dewan , Authorized Representatives for the Respondent ORDER PER : P. ANJANI KUMAR The present appeal is directed against the Order-in-Original No. 01/AKM/CST/ADJ/2012 dated 11.01.2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies; Shri A.K. Sorcar, Director Taxation in his statement categorically stated that the expenses were incurred on behalf of the service recipients and thus were reimbursed on actual basis. The ld. Counsel submits that there was no suppression of facts whatsoever with intent to evade payment of duty and therefore, extended period cannot be invoked. In support of his submissions, the ld. Counsel relies on the following case laws: UOI vs. Intercontinental Consultants Techmnocrats Pvt Ltd 2018 (10) GSTL 401 (SC) Tetra Pack India Pvt Ltd vs. CCE, Pune III 2015 (39) STR 995 (Tri. Mum.) Indian Institute for Production Management vs. CCE 2021 (46) GSTL 55 (Tri. Kol.) Dream Loanz vs. CCE, Coimbatore 2017 (6) GSTL 443 (Tri. Chennai) CCE, Indore vs. Mahendra Kumar Jain 2018 (8) GSTL 72 (Tri. Del.) Global Coal Mining Pvt Ltd vs. CST, New Delhi 2020 (36) GSTL 77 (Tri. Del.) affirmed by S.C. as 2021 (54) GSTL J10 (SC) Scott Wilson Krikpatrick India Pvt Ltd vs. CCE, Jaipur 2013 (39) STR 652 (Tri. Del.) Anand Nishikawa Co. Ltd vs. CCE, Meerut 2005 (188) ELT 149 (SC) Nestle India Ltd vs. CCE, Chandigarh 2009 (235) ELT 577 (SC) He further submits that the adjudication order cannot travel beyond the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of service tax cannot be anything more than or less than consideration paid as quid pro quo for rendering such services and therefore, reimbursable expenses cannot be includable; however, what constitutes reimbursable expenses is to be decided in the light of the decision of the Larger Bench of the Tribunal in the case of Sri Bhagavathy Traders vs. CCE, Cochin 2011 (24) STR 290 (Tri. LB). He further submits that the adjudicating authority has given a categorical finding that the appellant have not produced any documentary evidences are maintained in any separate account to justify the exclusion of these expenses from the gross taxable value. 8. Heard both sides and perused the records of the case. 9. The ld. Counsel has submitted that the issue involved is no longer res integra. He relies on the decision of the Hon ble Apex Court in the case of Intercontinental Consultants (supra). We find that the Hon ble Apex Court in the case of Intercontinental Consultants (supra) has held as follows: 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 mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 manifest, as noted above, viz., the service tax is to be paid only on the services actually provided by the service provider. 26. It is trite that rules cannot go beyond the statute. In Babaji Kondaji Garad, this rule was enunciated in the following manner : Now if there is any conflict between a statute and the subordinate legislation, it does not require elaborate reasoning to firmly state that the statute prevails over subordinate legislation and the byelaw, if not in conformity with the statute in order to give effect to the statutory provision the Rule or bye-law has to be ignored. The statutory provision has precedence and must be complied with. 27. The aforesaid principle is reiterated in Chenniappa Mudaliar holding that a rule which comes in conflict with the main enactment has to give way to the provisions of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to its meaning that arise by presumptions as to the intent of the maker thereof. 28. Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do 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 u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not pay any Service Tax in respect of expenses incurred by it which were reimbursed by the clients. A show cause notice was issued to it to explain why Service Tax should not be charged on the gross value including reimbursable and out of pocket expenses. The provisions of Rule 5(1) of the Rules were resorted to for this purpose by the Department. 38. A writ petition was filed before the High Court challenging the vires of Rule 5 as being unconstitutional as well as ultra vires the provisions of Sections 66 and 67 of the Act. The High Court of Delhi accepted the said contention and declared Rule 5 to be ultra vires the provisions of Sections 66 and 67 of the Act. The High Court noted that both the amended and unamended Section 67 authorised the determination of value of taxable services for the purpose of charging Service Tax under Section 66 as the gross amount charged by the service provider for such services provided or to be provided by him in a case where consideration for such service is money. The High Court placed emphasis on the words for such service and took the view that the charge of Service Tax under Section 66 has to be on the value of taxable service i.e. the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the value of material which is supplied free by the service recipient cannot be treated as gross amount charged as that is not a consideration for rendering the service. 40. Thus, the reimbursement charges could not have been included in the taxable value. The order passed by the Principal Commissioner confirming the demand for the reimbursement charges, therefore, needs to be set aside. 12. In view of the above, we find that the impugned issue is no longer res integra as has been decided by the Hon ble Apex Court and the Tribunal in the cases cited above. We find that as long as the expenses reimbursed are not shown to be a consideration towards the provisions of service, the same cannot be included for the purposes of arriving at the taxable value. The department has not brought out anything on record to show that the said expenses are indeed a consideration but were shown artificially as expenses. The finding of the adjudicating authority that the appellant could not produced any evidence or document to show that these are reimbursed expenses , is not a valid finding. It is for the department who alleged to prove the same with evidence; it is not for the appellant to dispr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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