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2024 (1) TMI 84 - CESTAT NEW DELHIRecovery of service tax alongwith interest and penalty - hotel services - reimbursement expenses - period commencing from October, 2014 to June, 2017 - invocation of extended period of limitation - HELD THAT:- From the terms of the Agreement and the documents on record it is more than apparent that the appellant was providing “business support service” to PI and the finding to the contrary recorded by the Commissioner in the impugned order that the service provided is “hotel service” and had been wrongly classified as “business support services” by the appellant is not justified. The Commissioner was also not justified in holding that the appellant was liable to pay service tax on reimbursement of expenditure in terms of rule 5(1) of the Service Tax (Determination of Value) Rules, 2006. The appellant had entered into an Agreement dated 01.02.2015 with HLL under which HLL was required to provide managerial and consultancy services with respect to the management of the hotel. The appellant had agreed to pay a fixed monthly amount to HLL as a consideration for management services - The appellant, which was the service recipient under the Agreement, paid the expenses for the employees of HLL and HLL, as a service provider, reimbursed such expenses. There is no payment of any consideration, which is an essential requirement for a service to attract the levy of service tax under the Finance Act. The Supreme Court in COMMISSIONER OF SERVICE TAX ETC. VERSUS M/S. BHAYANA BUILDERS (P) LTD. ETC. [2018 (2) TMI 1325 - SUPREME COURT] clearly held that consideration should be for taxable services provided or to be provided and there should be a nexus between the consideration and the services provider. The Supreme Court in UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [2018 (3) TMI 357 - SUPREME COURT] also held that the value of taxable services should be the gross amount charged by the service provider “for such service” and the valuation cannot be anything more or less than the consideration to be paid for quid pro quo for running such service. The reimbursable expenses have not been incurred by the appellant in exchange of the taxable service provided by it. The same cannot, therefore, be treated as a consideration for the taxable services - The Commissioner was, therefore, not justified in confirming the demand on reimbursements received from HLL. Extended period of Limitation - HELD THAT:- As both the demands cannot be confirmed and have to be set aside, it would not be necessary to examine the contentions advanced by the learned counsel for the appellant that the extended period of limitation could not have been invoked in the facts and circumstances of the case or that mere sharing of revenue cannot be said to have been made towards a provision of service. The impugned order dated 04.04.2022 passed by the Commissioner is, accordingly, set aside - Appeal allowed.
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