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TMI Blog2025 (2) TMI 628X X X X Extracts X X X X X X X X Extracts X X X X ..... nts & Technocrats Pvt. Ltd. v UOI [2012 (12) TMI 150 - 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 travelling beyond the scope of the said sections.
Conclusion - The reimbursed expenses are not part of the taxable value for service tax purposes in terms of Sections 66 and 67 of the Finance Act, 1994.
The impugned order is set aside - appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... g taxable service and are liable to be included in the gross value for the purposes of charging service tax on the taxable service rendered by the appellant as per provisions of Section 67 of the Act read with Rule 5(1) of the Valuation Rules. Therefore, alleging contravention of provisions of Section 68 of the Act read with Rule 6 of Service Tax Rules, 1994 for failing to pay appropriate amount of service tax and invoking extended period of limitation on the grounds that the appellant did not disclose such expenses being claimed as reimbursable in the ST 3 returns filed nor communicated these details to the Department in any other manner and that but for the verification conducted by the audit party such information would not have come to light; a show cause notice was issued demanding the aforementioned service tax payable along with appropriate interest as well as proposals to impose penalties. Consequent to the reply filed by the appellant, a personal hearing was granted, subsequent to which the adjudicating authority issued the impugned order in original No.30/2011 dated 28.03.2011 rendering a finding that the said reimbursable expenses cannot be excluded from the gross amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his case. The learned counsel submits that the extended period in terms of proviso to Section 73(1) can be invoked only when there is fraud, collusion, wilful misstatement, suppression of facts or contravention of any of the provisions of the chapter of the Act or the rules made thereunder with intent to evade payment of duty. The learned counsel submits that the question involved in the present matter is on interpretation of the provisions of the rules to determine the liability of the CHA to pay service tax on reimbursable expenses and thus no malafide can be attached to the appellant so as to warrant the invoking of extended period of limitation. 7. Learned Authorised Representative, Shri. N. Satyanarayana appeared for the Department and reiterated the findings in the impugned order in appeal. 8. We have heard both sides, perused the appeal records and the case law cited by the appellant. 9. We find that the issue is no more res-integra in view of the decision of the Honourable Supreme Court in the case of UOI v Intercontinental Consultants and Technocrats Pvt Ltd, 2018 (10) GSTL 401 (SC) which has considered the issue of liability to pay service tax on reim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able 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 charged for providing 'such' taxable services. As a fortiori, any other amount which is calculated not for providing such taxable service cannot a part of that valuation as that amount is not calculated for providing such 'taxable service'. That according to us is the plain meaning which is to be attached to Section 67 (unamended, i.e., prior to May 1, 2006) or after its amendment, with effect from, May 1, 2006. Once this interpretation is to be given to Section 67, it hardly needs to be emphasised that Rule 5 of the Rules went much beyond the mandate of Section 67. We, therefore, find that High Court was right in interpreting Sections 66 and 67 to say that in the valuation of taxable service, the value of taxable service shall be the gross amount charged by the service provider 'for such service' and the valuation of tax service cannot be anything more or less than the consideration paid as quid pro qua for rendering such a service. 25. This po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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, such as one finds in a work of fiction/non-fiction or even in a judgment of a court of law. There is a technique required to draft a legislation as well as to understand a legislation. Former technique is known as legislative drafting and latter one is to be found in the various principles of "interpretation of statutes". Vis-avis ordinary prose, a legislation differs in its provenance, layout and features as al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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