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2022 (2) TMI 857 - CESTAT CHANDIGARHNon-payment of service tax - Business Auxiliary Services - reimbursable expenses - non-discharge of service tax liability on the gross amount received from their clients - financial years 2006-2007 to 2010- 2011 - time limitation - HELD THAT:- The appellant has discharged service tax on the amounts received by them as management fee. The demand raised in SCN are only reimbursements and amounts received under the head sale of goods There is no doubt that the amount received under the head ‘sale of goods’ cannot be subjected to levy of service tax. In para 22.8 of the impugned order, the adjudicating authority also has taken this view wherein he has stated that sale of goods is not covered under ‘service’ in terms of the Finance Act, 1994 and hence not liable to levy of service tax. The demands confirmed by the adjudicating authority as seen from the show cause notice is on redemption receipts and reimbursement receipts. In para 13 of the impugned order it is observed by the adjudicating authority that the terms redemption receipts and reimbursable expenses are interchangeably used by the appellant in their accounts representing the charges received in the form of cash rebate, gift items and other expenses on behalf of their clients. It is thus clear that these are receipts reimbursed for the expenses incurred for providing the services - the finding by the adjudicating authority is confined to the alleged mark up on the expenses incurred being 15% of the cost and shown as management fee in the table of the agreement. The appellant has collected and accounted the service tax on variable management fee also. Department who has conducted extensive scrutiny of the accounts do not have a case that the service tax collected under these invoices are not deposited to the Government. There is no such allegation in the show cause notice. The Department has accepted and admitted in the show cause notice as well as impugned order that appellant has discharged service tax on management fee. Further, the table of show cause notice itself describes the amounts on which tax is demanded as reimbursements and not as management fee - the entire demand is raised on costs/expenses incurred by the appellants for providing the Business Auxiliary Service which was reimbursed by the clients. The Hon’ble Apex Court in UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [2018 (3) TMI 357 - SUPREME COURT] has categorically held that prior to 14.05.2015 reimbursable expenses for providing taxable service are not includable in the assessable value. The demand is raised on reimbursable expenses and that these cannot be included in the taxable value for the disputed period. The decision of the Hon’ble Apex Court in Intercontinental Consultants and Technocrats Ltd. has been consistently followed by the Tribunal. Applying the decision of the Apex Court in the above case, it is held that the demand cannot sustain. The issue on merits is answered in favor of appellant and against the Revenue. Time Limitation - HELD THAT:- The Revenue has not been able to establish any evidence of positive act on the part of the appellants for willful suppression or misstatement of facts. The demands in the show cause notice are prepared after scrutiny of the accounts, balance sheet, service tax returns of the appellant. There is no evidence to show that the appellant had suppressed receipts in their accounts. Moreover, the issue as to whether reimbursable expenses are includable in the taxable value is an interpretational in nature and has travelled upto the Apex Court. For these reasons, the demand raised for the extended period cannot sustain. The appellant succeeds on the ground of limitation also. The demand of service tax cannot sustain - Appeal allowed - decided in favor of appellant.
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