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TMI Blog2025 (4) TMI 449X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of audit it was noticed by the Department that the Appellant are also raising debit notes on their clients and recovering the miscellaneous expenditure incurred on behalf of the clients on actuals. On request, the appellant produced the debit notes which on scrutiny revealed that they have raised debit notes only for the actual expenses incurred but most of the expenses are not related to providing their output services However, the appellant has 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. The department being of the view that they have not acted as pure agent as they ought to have a contract to provide specific services in connection with providing the taxable service and being of the view that they are incurring these reimbursable expenses only to fleece their clients in order to make them do business with the appellant, issued a show cause notice contending that the appellant need to assess and pay service tax on the total value of such expenses realized through debit notes in terms of section 67(34) read with Rule 5(1) of Service Tax (Determinat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 67 of the Act by Finance Act, 2015, which was held to be prospective in nature and therefore, the period involved being April 2009 to December 2009, the demand in the instant case ought to be set aside. 5. Learned Authorised Representative, Shri. N. Satyanarayana appeared for the Department and reiterated the findings in the impugned order in appeal. 6. We have heard both sides, perused the appeal records and the case laws cited by the appellant. 7. We find that the appellate authority has upheld the order in original which had placed reliance on Rule 5(1) of the Valuation Rules to confirm the demand. 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 reimbursable expenses received by the service provider in the course of rendering services for the client, apart from the consideration received for rendering the services on which the client has discharged the liability to pay service tax. The Honourable Supreme Court affirmed the decision of the Delhi High Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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-a- vis ordinary prose, a legislation differs in its provenance, layout and features as also in the implication 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 operat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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