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2023 (5) TMI 523 - AT - Service Tax
Valuation - inclusion of reimbursement of expenses - expenditure incurred towards hotel stay, school tuition fees for the disputed period considering the same as part of the consideration paid for import of manpower services - period April 2015 to June 2017 - HELD THAT:- The issue of payment of service tax on secondment has been settled by the Supreme Court in the case of C.C.,C.E. & S.T. – BANGALORE (ADJUDICATION) ETC. VERSUS M/S NORTHERN OPERATING SYSTEMS PVT LTD. [2022 (5) TMI 967 - SUPREME COURT]. The issue is whether reimbursable expenses are includible in the gross value for levy of service tax. The issue is no longer res integra. The Hon’ble High Court of Delhi in the case of INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. VERSUS UOI. & ANR. [2012 (12) TMI 150 - DELHI HIGH COURT] held that reimbursements of amounts it received cannot be charged to service tax.
This issue with regard to non-payment of service tax on the reimbursable expenses travelled upto Hon’ble Apex Court wherein it got settled by the decision in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [2018 (3) TMI 357 - SUPREME COURT] The Apex Court has held as per Section 67 (un-amended prior to 1st May, 2006) or after its amendment with effect from 1st May, 2006, the only possible interpretation of the said Section 67 is that for the valuation of taxable services for charging service tax, the gross amount charged for providing such taxable services only has to be taken into consideration. Any other amount which is not for providing such taxable service cannot be the part of the said value. It was clarified that the value of service tax cannot be anything more or less than consideration paid as quid pro quo for rendering such services. Accordingly, it was held that Section 67 of Finance Act, 1994 do not allow inclusion of reimbursable expenses in valuation of service rules.