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2024 (1) TMI 677 - AT - Service TaxLevy of Service Tax - reimbursement amount incurred for the service recipient - appellant had paid service tax on the amount received towards agency charges while providing clearing and forwarding agent service - HELD THAT:- The Supreme Court in UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [2018 (3) TMI 357 - SUPREME COURT] noticed the various reimbursable claims which were included in the gross value. The Supreme Court noted that rule 5 does bring within its sweep the expenses which are incurred while rendering the service and are reimbursed and, therefore, what was required to be decided was whether section 67 of the Act permits subordinate legislation to be enacted as was done by rule 5. It needs to be noted that prior to 19 April, 2006, in the absence of a rule, the valuation was required to be done as per the provisions of section 67 of the Act. The Supreme Court noticed that the charging section 66 provides that there shall be levied service tax @ 12% of the value of taxable services referred to in the sub-clauses of Section 65 and collected in such manner as may be prescribed. Thus, the service tax is on the “value of taxable services” and, therefore, it is the value of the services which are actually rendered which has to be ascertained for the purpose of calculating the service tax. It is for this reason that the Supreme Court observed that the expression “such” occurring in section 67 of the Act assumes importance - The Supreme Court, therefore, held that the value of material which is supplied free by the service recipient cannot be treated as “gross amount charged” as that is not a “consideration” for rendering the service. The appeal filed by the Department was, therefore, dismissed. In view of the decisions of the Supreme Court and the Delhi High Court in Intercontinental Consultants, the amount of reimbursement could not have been included in the taxable value of the service under rule 5(1) of the 2006 Rules - Impugned order set aside - appeal allowed.
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