TMI Blog2018 (11) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... ices, then the amount charged by them should form part of the assessable value for the CHA services. The services rendered by the appellant during the course of Custom House Agency services in the form of handling of cargo etc. do not form a separate taxable service falling under Custom House Agency services or Port Services. It is a composite service rendered by the Custom House Agent. The amounts charged by them from their clients do not get included in the value of taxable services rendered to the extent that they are reimbursable expenses. This is a fact to be verified from the invoices and accounts. Appeal allowed by way of remand. - APPEALS No. ST/42/2009 & ST/43/2009 - A/31355-31356/2018 - Dated:- 30-10-2018 - Mr. M.V. RAVINDRAN, MEMBER (JUDICIAL) And Mr. P.V. SUBBA RAO, MEMBER (TECHNICAL) Shri Hari Radhakrishnan, Advocate for the Appellant. Shri Arun Kumar, Dy. Commissioner/AR for the Respondent. ORDER Per: Mr. P.V. Subba Rao 1. These two appeals pertain to the same issue in respect of same appellant and hence are being disposed of together. 2. Appeal No. ST/42/2009 pertains to the period 1999-2000, 2002-03 and 2006-07, while appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their clients were equal to the amounts which they have paid to their operators. In other words, they are reimbursable expenses which they recovered from their clients and are not services which they have rendered. He further submits that the CBEC have themselves recognised the nature of Custom House Agents goes beyond the facilitation of work in the Custom House. The Circular F.No. B43/1/97-TRU, dated 06.06.1997 in para 2.3, the role of Custom House Agents has been discussed as below: 2.3 The services rendered by the Custom House Agent are not merely limited to the clearing of the import and export consignment. The CHA also renders the service of loading/ unloading of import or export goods from /at the premises of the exporter / importer, the packing, weighment, measurement of the export goods, the transportation of the export goods to the customs station or the import goods from the customs station to the importer's premises, carrying out of various statutory and other formalities such as payment of expenses on account of octroi, destuffing / pelletisation, terminal handling, fumigation, drawback/ DEEC processing, survey / amendment fees, dock fees, repairing and examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the recipient of service when he makes payment to third party for the goods or services procured (ii) the recipient of service receives and uses the goods or services so procured by the service provider in his capacity as pure agent of the recipient of service; (iii) the recipient of service is liable to make payment to the third party; (iv) the recipient of service authorises the service provider to make payment on his behalf; (v) the recipient of service knows that the goods and services for which payment has been made by the service provider shall be provided by the third party; (vi) the payment made by the service provider on behalf of the recipient of service has been separately indicated in the invoice issued by the service provider to the recipient of service; (vii) the service provider recovers from the recipient of service only such amount as has been paid by him to the third party; and (viii) the goods or services procured by the service provider from the third party as a pure agent of the recipient of service are in addition to the services he provides on his own account. Explanation1. For the purposes of sub- rule (2), pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covers such expenditure from A, whether as a separately itemised expense or as part of an inclusive overall fee, service tax is payable on the total amount charged by B. Value of the taxable service for charging service tax is what A pays to B. Illustration 4. Company X provides a taxable service of rent-a- cab by providing chauffeurdriven cars for overseas visitors. The chauffeur is given a lump sum amount to cover his food and overnight accommodation and any other incidental expenses such as parking fees by the Company X during the tour. At the end of the tour, the chauffeur returns the balance of the amount with a statement of his expenses and the relevant bills. Company X charges these amounts from the recipients of service. The cost incurred by the chauffeur and billed to the recipient of service constitutes part of gross amount charged for the provision of services by the company X. 6. Thus, this rule holds that any expenditure or costs incurred by the service provider in the course of providing taxable services are also includible in the assessable value for determining the service tax. However, this rule has been held to be ultra-vires by Hon ble Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has rendered the services through other agencies and they have only collected the amounts from their clients to the extent their service providers charged from them. In other words, they have not charged anything extra for these services over and above what their service providers have charged them. As per Rule 5 of the Service Tax (Determination of Value) Rules, 2006, any expenditure costs incurred by the service provider should be treated as consideration. However, this rule has been run down by Hon ble Supreme Court in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. (supra) and therefore reimbursable expenses cannot be included in the value of the taxable services rendered by the appellant. However, it needs to be ascertained whether the amounts they have collected from their clients are the same as they were charged by the service providers. Otherwise, the remaining amount becomes the consideration for their services as Custom House Agency and needs to be included in the value of taxable services and service tax to be recomputed. 10. In view of the above, we find that the services rendered by the appellant during the course of Custom House Agency service ..... X X X X Extracts X X X X X X X X Extracts X X X X
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