TMI Blog2017 (11) TMI 1573X X X X Extracts X X X X X X X X Extracts X X X X ..... on - The facts of the present case along with connected documentary evidences are to be examined - the findings of the ld. Member (J) with reference to remand of the matter to the Original Authority is correct - the amounts claimed to be re-imburseable expenses can be excluded from the assessable value subject to verification of the agreements between the appellant and the banks and the supporting documents like invoices, etc to be submitted by the appellant. Time limitation - Whether the extended period of limitation has been rightly invoked as held by ld. Member (Technical) or the demand is barred by limitation as held by ld. Member (Judicial ) and as such, the appeal is to be allowed in toto, on the said disputed issue? - Held that: - Admittedly, the appellants maintained records of all the expenses and the present demand was based on such records. In such situation, I find that the demand cannot be invoked by alleging willful misstatement, fraud and intention to evade payment of tax. Here, the extended period was invoked on the ground that the information was not disclosed to the Department. When there is a bonafdide doubt based on the interpretation of the legal provisions, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 009 (238) ELT 21 (SC). All the facts were known to the department regularly from the year 2006-2007. (vi) Looking to the bona fide belief, the appellant is eligible the benefit under Section 80. In support, appellant relies on following judgements: (a) Hindustan Steel Vs. State of Orissa 1978 (2) ELT 159 (SC). (b) Smita Shetty Vs. CCE 2003 (156) ELT 84 (Bang.-CESTAT). (c) Flying Man Air Courier Pvt. Ltd. Vs. CCE 2006 (3) STR (Tri.-Del.) (vii) No penalty is imposable under Section 78 since there is no suppression of facts. 5. The ld. AR reiterates the findings of the lower Revenue authorities. 6. We find that the impugned order passed by Commissioner (Appeals) inter alia on its pages 4 to 6 has observed as under : I have also gone through the provisions Rule 5(2) of Service Tax (Determination of Value) Rules, 2006 and the various decisions. In the instant case the appellant is acting as recovery agent for various Banks. The activity is to recover the amount of loan from defaulters. To perform and execute above work of recovery agent the appellants have made a notice of an advertise in the Newspaper, make travelling to the destination of defaulter to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice) cannot be accepted. I also find that the appellant made expenses for security guard, advertisement, rent a cab etc. and got the amount reimbursed from the bank and at the same time availed credit of service tax paid against such input service. In view of this factual position, it cannot be argued that expenses incurred towards such input service (Reimbursable) cannot form the part of taxable value. In view of the above, I find that the circulars and decisions relied by the appellant are not relevant to the present case and the amount reimbursed by the bank is a part of taxable value. I hold accordingly. 6.1 In addition to above observations in the impugned order, we find that the appellant has not been able to prove that the subject expenses do not pertain to the items/activities services which are not integrally linked with their main activity/service of recovery agent. Without the subject items/activities for which the appellant has taken reimbursement from the clients the activity of recovery agent cannot be performed by them. The fact of reimbursement of expenses for the subject items/activities by the clients cannot make any difference to the conclusion that the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed except on the issue of denial of Cenvat credit for which the case is remanded back to the original adjudicating authority, who shall decide in terms of the findings given in para 7.1 above within three months of receipt of order after giving an opportunity of personal hearing and that of production of documents to the appellant. 9. The appeal decided in above terms. ( Pronounced in Court on................................ .) (Archana Wadhwa) Member (Judicial) (Ashok K. Arya) Member (Technical) Per Archana Wadhwa: 10. After having gone through the order proposed by my Ld. Brother I proceed to record separate findings. 11. As already observed in the proposed order, appellants are engaged in the business of providing services of recovery agent to various Nationalised Banks since 1988. The service of recovery agents were brought under the service tax net w.e.f. 01.05.2006, for which purpose the appellant procured registration from their Jurisdictional Service Tax Department. 12. During providing services the appellant incurred certain expenditures like Parking charges, arrangement of security guards, Insurance premium, videography, police escor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ider for such service provided by him. The said decision of the Hon ble High Court of Delhi is fully applicable to the facts of the present case. The appellants are providing the services of recovery agents and for carrying out such services , for which they are being paid by the bankers or the other financial institutions. They have to undertake the other expenses for which the banks have agreed to re-pay the same. In other words, it can be observed that instead of the appellant making the travel arrangements or arranging the police escorts or the security guards, etc. the same could have been provided by the banks itself, in which case, the appellant would be under no obligation to incur expenses and to seek reimbursement. As such, as far as the legal issue is concerned, I am of the view that the said decision of the Delhi High Court which seems to have escaped the attention of my Ld. Brother Shri Ashok K. Arya while passing the order, squarely covers the issue in favour of the appellant. 16. However, I find that though the appellants have stated in their memo of appeal about the agreement between them and the bankers as regards the reimbursement of such expenses, as also f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16.02.2017} (Ashok K. Arya) Member (Technical) (Archana Wadhwa) Member (Judicial) Interim Order No. 52/2017 Per B.Ravichandran: The present appeal is referred to third Member in view of difference of opinion between the members in the Division Bench on certain aspects. The brief facts of the case are that the appellant is in the business of providing services as Recovery Agent to various nationalized banks for the past many years. The services rendered by them were subjected to service tax w.e.f. 1.5.2006. One of the disputes involved in the present appeal is relating to valuation of the taxable services provide by the appellant. The difference of opinion also is only with reference to such valuation and question of limitation. 2. During the course of providing services as Recovery Agent to the client banks, the appellants incurred certain expenditure like parking charges, arrangement of security guards, insurance premium, videography, police escorts, publication in newspaper, etc. The appellant claimed that in terms of the agreement with the banks, these are reimbursed on actual basis. Hence, these expenses are not to be included in the value for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iding service as recovery agent. These expenses were reimbursed to them on actual basis. This aspect can be verified in terms of the agreement, documents/invoices supporting the claim of the appellant. 6. I note that the decision of the Hon‟ble Delhi High Court in Intercontinental Consultants Technocrafts Pvt. Ltd. - 2013 (29) STR 9 (Delhi) has not been considered, before a decision is arrived at by the ld. Member (T). The Hon‟ble Delhi High Court held that the rule 5 (1) of the Valuation Rules 2006 is ultra virus of the substantive legal provisions of Section 67 and 68 of Finance Act, 1994. The High Court was dealing with similar reimburseable expenditure regarding travel or accommodation. The facts of the present case along with connected documentary evidences are to be examined in line with the observation of the Tribunal in Shree Bhagvathy Traders (supra) and Hon‟ble Delhi High Court in Intercontinental Consultants Technocrafts Pvt. Ltd. (supra). This can be done by the Original Authority for a fresh decision. As such, the findings of the ld. Member (J) with reference to remand of the matter to the Original Authority is correct. 7. Regarding the ques ..... X X X X Extracts X X X X X X X X Extracts X X X X
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