2023 (9) TMI 809 - CESTAT KOLKATA

Valuation of services - reimbursement of expenses received by the Respondent are includable in the assessable value for the purpose of payment of service tax or not - pure agent services - period from 2000-01 (October) to 2004-05 (September) - HELD THAT:- Service tax (Determination of Value) Rules, 2006, has brought in the concept of ‘Pure Agent’ to address the taxability issues of reimbursements. As per the said Rules, expenditure incurred as a ‘Pure Agent’ were excluded from the assessable value. In the present matter under dispute, a perusal of the agreements entered with the different principals clearly revels that there were specific amounts for remuneration to be charged as a C&F Agent - It is also observed that the Respondent has recovered precisely the same amount from the recipient that has been paid on their behalf by producing the documentary evidence in regard to such expenditure. Thus, it is clearly established that the Respondent has acted as 'Pure Agent' while incurring such expenditure.

It is observed that all the 'reimbursement expenses' have been included in the consideration with effect from 14/05/2015. Hence while calculating service tax, the service provider has to include all the expenses whatever he incurred for rendering service, w.e.f.14.04.2015 only and not before that period. The dispute in the present appeal pertains to the period from 2000-01 (October) to 2004-05 (September) and hence, the substitution brought in the definition of 'Consideration' vide Finance Act, 2015 would not be applicable for the period in the present appeal.

The ratio of the decision in the case INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. VERSUS UOI. & ANR. [2012 (12) TMI 150 - DELHI HIGH COURT], squarely applicable in this case, where it was held that By including the expenditure and costs, Rule 5(1) goes far beyond the charging provisions and cannot be upheld - Thus, Section 94(4) does not add any greater force to the Rules than what they ordinarily have as species of subordinate legislation.

It is observed that the adjudicating Authority has dropped the demand made in the Notice on the ground that the remuneration for C&F work and reimbursement for miscellaneous activities have been separately mentioned against specific items and they got reimbursement on actual basis - impugned order upheld - appeal of Revenue dismissed.