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Commissioner of Central Excise, Goa Versus M/s Machado & Sons Agents & Stevedors Pvt. Ltd.

Demand of Service Tax - Port services, Cargo Handling, Steamer Agents, "Business Auxiliary Services" and renting of immovable property services - collected charges under various heads as reimbursement charges - Held that:- on perusal of sample documented invoice, it is found that respondent had issued invoices indicating herein that particular invoice is for reimbursement of an amount paid to Mormugao Port Trust towards Cargo related charges and annexing invoice which is in respondent's name iss .....

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rmination of Value) Rules, 2006 which would mean any amount of reimbursement of the expenses cannot be included for discharge of Service Tax liability. - Decided against the revenue - Appeal No. ST/88800/13-Mum - Order No. A/86880/16/STB - Dated:- 31-3-2016 - SHRI M.V. RAVINDRAN, MEMBER (JUDICIAL) AND SHRI C.J. MATHEW, MEMBER (TECHNICAL) For the Petitioner : Shri V.K. Singh, Spl. Counsel For the Respondent : Shri H.K. Maingi, Advocate with Shri C.S. Biradar, Advocate ORDER PER: M.V. RAVINDRAN: T .....

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referred to as the said services) from various parties to whom they had provided the said services, however, they were not paying Service Tax on the entire amounts so received as seen in the ledger accounts maintained by them in respect of each client for the aforesaid services. The amounts received by them were actually the input taxable services rendered by them/cost of Government dues/charges, which had been billed by them and were to be included in the gross amount charged and which had been .....

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ter considering the evidence produced by the respondent during the course of personal hearing, came to the conclusion that amounts received for the said services are reimbursement. Accordingly, by reasoned order he dropped the proceeding initiated by the show-cause notice. 3. Learned Special Counsel appearing on behalf of the Revenue would draw our attention to the facts of the case, show-cause notice and various other documents. He would submit that the respondent is registered with the departm .....

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Customs Overtime Charges, Hire of Launches Charges, Shipment Income, Wagon Freight Charges, Ship Agency Income. It is his submission that these charges having paid by respondent to Port Authority for stevedoring/operations and should be considered for discharge of Service Tax liability under port services. He would submit the charges mentioned viz. paid to Customs Department, Panaji are collected from their service recipient, hence Service Tax liability arises. It is his submission that the adj .....

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authority has erred in dropping the proceeding initiated by the show-cause notice. It is his submission that the adjudicating authority has mentioned that nature of expenses incurred and payments made by the respondent on behalf of their principle, is being done so as a pure agent, seems to be incorrect, as the activity relates to Cargo related activity and labour engaged for loading/unloading of Cargo an activity which is an integral part of the services provided by respondent to their principl .....

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for the services from the respondents principle. It is his submission that in the case of Sri Bhagyavathy Traders Vs. Commissioner of Central Excise, Cochin - 2011 (24) STR 290 (Tri.-LB), it has held that only when service recipient is having obligation legal or contractual, to pay certain amount to any third party and said amount is paid by the service provider on behalf of the service recipient, question of reimbursement arises. He would also submit that adjudicating authority has erred in d .....

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mpugned order. He would submit that the Hon'ble High Court of Delhi in the case of Intercontinental Consultants & Technocrats Pvt. Ltd. Vs. Union of India 2013 (29) STR 9 (Del.) held that Rule 5(1) of Service Tax (Determination of Value) Rules, 2006 is ultra vires of Act. It is his submission that accordingly for value of services, which are provided or to be provided by the respondent himself only can be charged to Service Tax. It is his submission that the Service Tax on reimbursable a .....

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Tax liability is on account of certain amounts received by the respondent as reimbursement charges. It is the case of the Revenue that these amounts need to be considered for imposing Service Tax on the respondent. 7. On perusal of Order-in-Original, we find that the adjudicating authority has considered the entire proposal in show-cause notice and analysis thereof and has also considered the various evidences which are produced by respondent on him. We reproduce the relevant findings:- 22. I ha .....

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e it clear that the noticee was appointed by them as their agents for the said vessels call at the said ports for arranging all port, Customs Formalities, Payments, Tax formalities etc. directly with the above port prior to ships berthing for smooth loading operation in good time. It appeared that based on the letters/mails whose nature is nothing but authorizations, the noticee acted on behalf of their principals by way of arranging/organizing related activities through third parties for load .....

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. Bulk Prosperity charges, M.V. Dona Paula Expenses, Ship Agency Income, Shipment Income, Vessel related charges, Wagon Freight Charges, Wharf Dues & Plot Rent, W.O.B.-Shipment charges is described in detail as below. Sr. No. Account Head Category Nature of Payment To whom payment was made by the noticee 1 Cargo related charges Cargo dues for loading of vessels at Mormugoa and Panjim Port Mormugoa Port Trust/Captain of Ports 2 Customs Cess Customs Cess during loading of Cargo Commissioner of .....

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ng loading of vessel at Mormugao Port Trust Mormugoa Port Trust - Cargo Handling Labour Dept. 7 M.V. Bulk Prosperity Expenses incurred on behalf of principals towards Hotel/taxi arranged for Representative, Bunker supplied, Cash to Master, Port Dues for loading of vessels by Transhipper 1. Mormugoa Port Trust 2. Bunkers 3. Cash paid to Masters 8 M.V. Dona Paula Expenses All expenses are reimbursement for handling/manning of the Floating Crane Dona Paula e.g. Crane Operators Salary, Material supp .....

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Ports 12 Wagon Freight Amount paid to transport coal by rail wagons South Central Railway 13 Wharf Dues & Plot Rent Plot rent for storing coal cargo discharged from vessel at MPT Mormugoa Port Trust 14 W.O.B.-Shipment Expense Additional stevedoring expenses for loading of vessels at West of Break water, Mormugao as Promotional Scheme Charges Mormugoa Port Trust - Cargo Handling Labour Dept. 23.1 From the above chart and as per the case records, it appeared that the noticee organized certain .....

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Central Excise towards Customs Cess, Custom Overtime and Custom Light Dues are statutory in nature and payable as per enactments thereby the same are outside the purview of Service Tax provisions and Service Tax is not recoverable on the said amounts. Also seen that the noticee paid substantial amounts to Mormugao Port Trust, Captain of Ports and South Central Railway towards services as mentioned above on behalf of their principals. These organizations are either Govt. Departments or Statutory .....

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ust are distinct and different form the services of the Noticee as can be seen. Similar is the case with other third parties also to whom payments were made by the noticee on behalf of their principals. 23.2 Therefore, from the nature of the payments made it can t be said that such payments are in the nature of expenditure incurred by the Noticee for providing the taxable services and hence can t be included in the taxable value. Moreover, the noticee says that the recipients of such payments ha .....

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ayment which they call as agency income and the actual cost of the job is reimbursed by the principals. It the said cost is also treated as includable in the agency income and then subjected to tax then they should be actually providing that service to the principals. But the evidence suggests that the job is done by a third party and not by the Agent. Therefore, asking agent to include the cost of job in his agency income and pay the tax is not tenable. As against the above said factual finding .....

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