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2023 (9) TMI 71 - AT - Service TaxValuation - expenditure or costs incurred by the service provider shall be treated as consideration for the taxable service provided and shall be included in the value for the purpose of charging service tax or not - pure agency services - Rule 5(1) of the valuation Rules - suppression of facts or not - extended period of limitation - HELD THAT:- Service provider has not acted as a ‘pure agent for the service recipient within the meaning provided in Explanation 1 to Rule 5(2) of Valuation Rules. Service provider further not fulfilled the conditions detailed in Rule 5 (2) of the valuation Rules. It is beyond doubt that in order to exclude expenditures or costs incurred by the service provider, they should have acted as a pure agent and the condition detailed in Rule 5 (2) of the valuation Rules were required to be followed in principle. The benefits are considerable and substantial and therefore, condition have to necessarily be fulfilled in order to exclude the costs and expenditure, which is not the case here - Therefore, there is no question of excluding any amount from the total taxable value received by the Service provider from the service recipient on any count. The adjudicating authority has not taken into cognizance the provisions of Rules 5(1) and 5(2) of the Service Tax valuation Rules. From a perusal of the activity undertaken by the appellant, it is seen that the appellant had only paid the amount / charges on behalf of their clients to respective service providers and their clients reimbursed the charges to the appellant. The said transactions of appellant do not fall under ‘Support Service of Business or commerce’. Demand on difference between the amounts received from the client as reimbursable expenses and the amount spent/ incurred - HELD THAT:- The demand is not sustainable - Once the Ld. Commissioner hold that the reimbursable part of expenses is not taxable, then there is no legal basis to confirm the service tax on differential amount under ‘Support Service of Business or Commerce’. Further, there is no evidences on records to establish that the said difference amount are pertaining to the service provided by the appellant - the service tax demand confirmed by the Ld. Commissioner on difference amount is not sustainable and we set aside the same. Taxability of Ocean Freight and reimbursement expenses - HELD THAT:- The issue involved herein is purely of interpretation of law about valuation and taxability of the service. It is also fact that the appellant have been submitting all the documents details to the department. In this fact no malafied intention can be alleged against the appellant - since there is no suppuration of fact or malafied intention to evade payment of service tax, demand for the extended period shall not be sustainable also on the ground of limitation. The demand is set aside not only on merit but also on limitation for the period which is beyond normal period of limitation - the impugned order confirming service tax demand cannot be sustained and need to be set aside - Appeal filed by assessee is allowed.
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