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TMI Blog2025 (2) TMI 482X X X X Extracts X X X X X X X X Extracts X X X X ..... Business Auxiliary Service. During the verification of balance sheets and other records it was noticed by the Department that the Appellant apart from their commission for providing steamer agency services collected various charges such as port congestion charges, port storage charges, seal amendment charges and detention charges. However, the appellants have not included the aforementioned charges collected in the gross taxable value for the purpose of payment of service tax and did not pay service tax on the said charges. It was also noticed that there is a difference in the values as reported in Balance sheet and ST 3 returns resulting in short payment of service tax. A show cause notice was issued and after following due process of law the adjudicating authority issued an order in original (OIO in short) confirming the demands proposed in the show cause notice for the period April 2005 to September 2010 under proviso to Section 73(1) of the Finance Act, 1994 (Act in short) along with applicable interest under section 75 of the Act and imposing penalties under Section 77 and 78 of the Act. Aggrieved by the said OIO, the appellant preferred an appeal before the appellate authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se charges invoking Rule 5(1) of the Valuation Rules 2006 which has since been struck down by the Honourable Delhi High Court in the Intercontinental Technocrats case and further affirmed by the Honourable Supreme Court. These expenses are reimbursed by the client on actuals. The appellant did not discharge service tax on the reimbursable expenses as it is not a consideration for any services rendered. The learned counsel submits that only the service charges received as consideration for the services provided or to be provided would form part of the taxable value for the purposes of service tax and reimbursements are not liable to tax. 4. The learned counsel submits that the Honourable Supreme Court has in the case of UOI v Intercontinental Consultants and Technocrats Pvt Ltd, reported in (2018) TIOL 76-SC-ST : 2018 (10) GSTL 401 (SC), affirmed the decision of the Delhi High Court wherein Rule 5(1) of the Service Tax Valuation Rules, 2006 which provided for inclusion of expenditures or costs incurred by the service provider in the course of providing taxable services, in the value of such taxable services, was stuck down as ultra vires Section 66 and Section 67 of the Act and as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 thereupon. 24. In this hue, the expression 'such' occurring in Section 67 of the Act assumes importance. In other words, valuation of taxable services for charging service tax, the authorities are to find what is the gross amount cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des Phosphates v. Yamashita-Shinnihon Steamship Co. Ltd. Thus, legislations which modified accrued rights or which impose obligations or impose new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect; unless the legislation is for purpose of supplying an obvious omission in a former legislation or to explain a former legislation. We need not note the cornucopia of case law available on the subject because aforesaid 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." 30. As a result, we do not find any merit in any of those appeals which are accordingly dismissed." 8. In light of the Honourable Supreme Court's decision reproduced supra, we are of the considered view that the findings in the impugned order in appeal confirming the demand on port congestion charges, port storage charges, seal amendment charges and detention charges cannot sustain and are liable to be set aside. 9. As regards the demand confirmed on the diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of profit in the transaction. The respondent when acting as agent on behalf of airlines/shipping lines was discharging service tax w.e.f. 10-9- 2004. However, with reference to amount collected from exporters/shippers the original authority clearly recorded that it is not the case that this amount is a commission earned by the respondent while acting on behalf of the exporter and said mark-up value is of freight charges and are not to be considered as commission. Based on these findings the demand was dropped. We do not find any impropriety in the said finding. The grounds of appeal did not bring any contrary evidence to change such findings. Accordingly, we find no merit in the appeal by Revenue. The appeal is dismissed." 6. Following the decision referred to in para 5 above, we are of the view that the demand cannot sustain and requires to be set aside. The impugned order is set aside. The appeal is allowed with consequential reliefs, if any." 10. We also notice that this Tribunal in its decision in Tiger Logistics India Ltd v. Commissioner of Central Tax GST, New Delhi, reported in (2023) 9 Centax 117 (Tri-Del) has also, after noticing a number of earlier decisions, held ..... X X X X Extracts X X X X X X X X Extracts X X X X
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