TMI Blog2017 (12) TMI 451X X X X Extracts X X X X X X X X Extracts X X X X ..... ax, we find that the services rendered by the appellant-assesses are, in fact, to be considered as export - the appellant-assesses are not liable to service tax on this service - in favor of assessee. Liability of service tax - expenditure incurred in foreign exchange - includibility - reimbursable expenses - Held that: - It is clear that there is no categorical finding as to how the expenditure incurred in foreign exchange can be considered as a payment towards specific category of taxable service and thereafter can be subjected to tax at the hands of the appellant on reverse charge basis. We find considerable force in appellant-assesse’s plea with reference to presumptive nature of the demand for service tax attributable to expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned order. The original authority held that the appellants are liable to pay service tax of ₹ 21,32,201/-. He dropped a demand for ₹ 93,73,670/-, which is attributable towards reimbursable expenditure incurred by appellant-assesses while providing service. He also ordered recovery of ₹ 2,710/- towards irregular Cenvat credit availed by the appellant-assesses. Penalties were imposed under Sections 77 78 of Finance Act, 1994. 2. The ld Counsel appearing for the appellant submitted that a demand of ₹ 6,76,382/- has been confirmed on the ground that the appellant-assesses provided management or business consultant service to M/s Nippon Koei Co Ltd, Japan. The ld Counsel submitted that the service is receiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ratio of the decision of Hon ble Delhi High Court in M/s Intercontinental Consultants Technocrats (P) Ltd, 2012 TIOL 966 HC Delhi-ST to hold that the taxable value cannot include reimbursable expenditure incurred on behalf of client. 7. The ld AR contested the grounds of appeal by the appellant-assesse. He submitted that though the appellants provided service as per agreement with M/s Nippon Koei Co. Limited, the ultimate use of service is for special assistance in project formation in Gujarat forestry sector. As such, the services are in India only. There is no export of service in such case. 8. Regarding the liability of the appellant-assesses for service tax, on reverse charge basis in respect of expenditure shown in fore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal in: i) M/s Gap International Sourcing (India) Pvt Ltd-2014-TIOL-465-CESTAT-DEL ii) M/s Microsoft Corporation (I) (P) Ltd-2014 (36) STR 766 (Tri.Del.) iii) M/s Paul Merchants (P) Ltd-2013 (29) STR 257 (Tri.-Del.) are squarely applicable to the present case. 10. We note that the said ratio has been upheld by the Hon ble Delhi High Court in M/s Verizon Communication India (P)Ltd-2017-TIOL-1863-HC-Del.-ST. As such, we find that the appellant-assesses are not liable to service tax on this service. 11. Regarding second issue, we note that the service tax liability is confirmed against the appellant without actually examining the scope of the transaction/agreement with the foreign based companies to whom t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on reverse charge basis would have been eligible to the appellant-assesses as a credit for discharging further service tax liability. In such scenario, we find no justification to invoke the extended period for demand. 12. With reference to appeal filed by the Revenue, we note the same is against dropping of demand by the original authority, attributable to reimbursable expenditure. We note that the Revenue contested the finding of the original authority on the ground that the Board s clarification is only with reference to out-of-pocket expenditure, supported by documentary evidences. In terms of Rule 5 of Valuation Rules, reimbursable cost of expenditure is to be treated as a consideration for taxable services. Regarding decision of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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