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TMI Blog2019 (6) TMI 1324X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses such as freight, stationary, printing charges, telephone charges, asset hire, courier, insurance and other taxes while providing C & F agency service. The appellant claimed deduction of these amounts as 'reimbursement expenses' from computation of gross amount charged under Section 67 of Finance Act. The Department felt otherwise and issued a Show Cause Notice dated 22/23/10/2007 which was confirmed by the Order-in-Original dated 30/3/09. A total demand of Service Tax amounting to Rs. 6,95,965/- and Education Cess amounting to Rs. 7951/- were confirmed along with interest under provisions of Section 73 and 75 of Finance Act. A Penalty of 2 % per month on the aforesaid confirmed amount, limited to extent of confirmed amount, upon the appellant under Section 76 of the Act. The appellant assailed this order before Commissioner (Appeal), however, the same was dismissed and hence the present appeal. 3. Heard the parties and perused the appeal records. 4. After hearing both the sides, we find that the issue is regarding non-includeability of 'reimbursement expenses' for computation of service tax under Section 67 of the Finance Act. This issue is squarely covered in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oposition that Rules cannot be over-ride or over-reach the provisions of the main enactment [Central Bank of India & Ors. v. Workmen, etc., (1960) 1 SCR 200; Babaji Kondaji Garad v. Nasik Merchants Co-Operative Bank Ltd., (1984) 2 SCC 50; State of U.P. & Ors. v. Babu Ram Upadhya, (1961) 2 SCR 679; CIT v. S. Chenniappa Mudaliar, (1969) 74 ITR 41; Bimal Chandra Banerjee v. State of M.P. & Ors., (1971) 81 ITR 105 and CIT, Andhra Pradesh v. Taj Mahal Hotel, (1971) 82 ITR 44]. The High Court also referred to the judgment of Queens Bench of England in the case of Commissioner of Customs and Excise v. Cure and Deeley Ltd. [(1961) 3 WLR 788 (QB)]" 21. Undoubtedly, Rule 5 of the Rules, 2006 brings within its sweep the expenses which are incurred while rendering the service and are reimbursed, that is, for which the service receiver has made the payments to the assessees. As per these Rules, these reimbursable expenses also form part of 'gross amount charged'. Therefore, the core issue is as to whether Section 67 of the Act permits the subordinate legislation to be enacted in the said manner, as done by Rule 5. As noted above, prior to April 19, 2006, i.e., in the absence of any such Rule, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner of Income Tax (Central)-I, New Delhi v. Vatika Township Private Limited [(2015) 1 SCC 1] wherein it was observed as under : A legislation, be it a statutory Act or a statutory rule or a "27. statutory notification, may physically consists of words printed on papers. However, conceptually it is a great deal more than an ordinary prose. There is a special peculiarity in the mode of verbal communication by a legislation. A legislation is not just a series of statements, such as one finds in a work of fiction/non-fiction or even in a judgment of a court of law. There is a technique required to draft a legislation as well as to understand a legislation. Former technique is known as legislative drafting and latter one is to be found in the various principles of "interpretation of statutes". Vis-a-vis ordinary prose, a legislation differs in its provenance, layout and features as also in the implication as to its meaning that arise by presumptions as to the intent of the maker thereof. Of the various rules guiding how a legislation has to be 28. interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) for quashing Rule 5 in its entirety of the Service Tax (Determination of Value) Rules, 2006 to the extent it includes the reimbursement of expenses in the value of taxable service for the purpose of charging service tax; and (ii) for declaring the rule to be unconstitutional and ultra vires Sections 66 and 67 of the Finance Act, 1994; and (iii) for quashing the impugned show-cause notice-cum-demand dated 17-3-2008 holding that it is illegal, arbitrary, without jurisdiction and unconstitutional. 8. The case set up by the respondent in the writ petition was that Rule 5(1) of the Rules, which provides that all expenditure or cost incurred by the service provider in the course of providing the taxable services shall be treated as consideration for the taxable services and shall be included in the value for the purpose of charging service tax, goes beyond the mandate of Section 67. It was argued that Section 67 which deals with valuation of taxable services for charging service tax does not provide for inclusion of the aforesaid expenditure or cost incurred while providing the services as they cannot be treated as element/components of service. Section 67 was amended by Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X
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