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2016 (5) TMI 134 - AT - Service TaxTaxability - Amount received under the category of “Management Consultancy and Manpower Recruitment Supply Agency Service” - Appellant wrongly claimed expenses as reimbursable and did not include the same in the taxable value for payment of service tax - Held that:- the appellant has been showing the amounts which has been claimed as reimbursable are not an amount towards the services but are in respect of various fees paid to DGFT authorities towards the application fees, licence fees, etc. Also the demand drafts raised in the name of DGFT authorities and receipts are issued by DGFT authorities in respect of the appellant's client who were undertaking the liasioning work with the authorities. Therefore, the service tax liability, as confirmed, is incorrect as the said amounts on which tax liability has been raised is nothing but reimbursement of the expenses incurred by the appellant for the licence fees, etc. Disallowance of Cenvat credit - Held that:- the said amount is in respect of service tax paid on broad band services, courier services, internet and automobile service stations. These services are utilised by the appellant for rendering the output services i.e. "Management Consultancy Services". Therefore, the appellant was and is eligible to avail Cenvat credit of this amount. Accordingly the impugned order is set aside. The issue, TDS credited to the debtors ledger for which no income tax refund has been received, needs reconsideration by the adjudicating authority as service tax payable on TDS which has been credited is more or less seems to be an accounting entry which needs to be appreciated in its proper perspective. As regards advance received prior to provisions of tax payable on advances/change in definition of services to be provided is included, it is the tax liability and advance payments received which according to the appellant, is not taxable because of various reasons, which has not been addressed by the lower authorities. Therefore, the impugned order is set aside and matter remanded back. As regards Service tax on advance/payment received of exempted services towards services provided to SEZ, Service tax on reimbursement of expenses received in the capacity of Pure agent and Service tax on receipt of amount towards reimbursement of statutory expenses, it is found that these amounts are considered by the lower authorities as taxable, but are nothing but reimbursable amounts of various expenses paid by the appellant as a pure agent. There is no dispute that these three payments on which tax liability has been raised is in respect of the payment received for exempted services provided to SEZ and reimbursable expenses of the licence fees, etc. paid by the appellant. So, the appellant has made out a case in their favour in respect of these three tax demands. Accordingly, the impugned order is set aside to that extent. As regards Service tax on reimbursement of expenses in the capacity of pure agent, it is the claim of the appellant that these tax liabilities is also on the reimbursable expenses in the capacity of pure agent but it is found that it is not so. It is noted that the appellant has been charging more than the expenditure incurred by him as a pure agent while billing the clients. So, the claim of the appellant that of a pure agent in these demands seems to be without any evidence as there is no dispute that the appellant had charged additional amount other than the amount paid as reimbursable expenses. Therefore, the service tax liability is upheld along with interest and is liable for penalty as per Section 76 of the Finance Act, 1994. - appeal disposed of
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