Reimbursed Expenses to Customs House Agents Not Part of Service Tax Value Under Rule 5(1) of Valuation Rules

CESTAT determined reimbursed expenses received by a Customs House Agent (CHA) from clients are not includible in the taxable value for service tax assessment. Following SC's ruling in UOI v Intercontinental Consultants case, the tribunal held that Rule 5(1) of Service Tax Valuation Rules 2006 was ultra vires to Sections 66 and 67 of the Act. The expenses reimbursed to CHA, separate from the service fees on which service tax was already paid, cannot form part of the assessable value. The tribunal set aside the original order that had included such reimbursements in the taxable value, allowing the appellant's appeal and confirming that reimbursed expenses fall outside the scope of service tax valuation. .....

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