TMI Blog2019 (8) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... pient to the appellant - Therefore, these charges are over and above the remuneration in respect of CFA service and it is not towards the service of CFA as a reimbursement of expenses. Therefore, it cannot be said that the reimbursable expenses is part of the service charge of CFA . This issue has been considered by the Hon ble Supreme Court in the judgment cited by the appellant in the case of COMMISSIONER OF SERVICE TAX, CHENNAI, TAMIL NADU VERSUS M/S MALABAR MANAGEMENT SERVICES PVT. LTD. [ 2019 (7) TMI 1161 - SC ORDER] , where it was held that reimbursement of salary and infrastructure expenses not be termed as amount charged towards the service provided by the service provider. Therefore, since the details of all reimbursable charges on the agreement needs verification and the matter needs to be remitted back to the adjudicating authority to ascertain the facts regarding the remuneration towards the service and reimbursable expenses and accordingly re-quantify the demand, if any arise. Demand of service tax on Business Auxiliary Service - HELD THAT:- As per the appellant s submission he has raised that one of the service is franchisee for which service tax liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt and the same is reimbursed, therefore, and these charges are not part of their activity as Clearing and forwarding agent service. The remuneration towards the CFA service is clearly indicated in each contract with the service recipient, only such remuneration which is representing the service charges towards CFA service is liable to the tax under heard of CFA service, therefore, the reimbursement of expenses incurred on behalf of the principal client who is the service recipient is not part and partial of the service charge of CFA service, therefore, the same is not liable for service tax. In support of this submission, he placed reliance on the following judgment:- ICC Reality (India) Pvt. Ltd.-2013 (32) STR 427 Malabar Management Service Pvt. Ltd-2019 (22) GSTL J56(SC) Sanghmitra Services Agency-2014(33) STR 137 M/s Inductotherm-A/10987/2018 Pinnacle Shares Registry Pvt. Ltd.-2015 (40) STR 194 Mosaic India Pvt Ltd-2014 (12) TMI 169 Bhayana Builders (P) Limited-2013 (32) STR 49 Bhayana Builders (P) Limited-2018 (10) GSTL 118 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses are incurred as per the instruction of the service recipient the same is reimbursed on actual basis by the service recipient to the appellant. Therefore, in our view, these charges are over and above the remuneration in respect of CFA service and it is not towards the service of CFA as a reimbursement of expenses. Therefore, it cannot be said that the reimbursable expenses is part of the service charge of CFA . This issue has been considered by the Hon ble Supreme Court in the judgment cited by the appellant: In the case of Malabar Management Service Pvt. Ltd (Supra), it was held that reimbursement of salary and infrastructure expenses not be termed as amount charged towards the service provided by the service provider. In the case Bhayana Builders (P) Limited the Hon ble Supreme Court observed as under:- 11.As already pointed out in the beginning, all these assessees are covered by Section 65(25b) of the Act as they are rendering construction or industrial construction service , which is a taxable service as per the provisions of Section 65(105)(zzq) of the Act. The entire dispute relates to the valuation that has to be arrived at in respect of taxable s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntions that the service tax will be @ 12% of the value of taxable services . Thus, service tax is reference to the value of service. As a necessary corollary, it is the value of the services which are actually rendered, the value whereof is to be ascertained for the purpose of calculating the service tax payable thereupon. 24.In this hue, the expression such occurring in Section 67 of the Act assumes importance. In other words, valuation of taxable services for charging service tax, the authorities are to find what is the gross amount charged for providing such taxable services. As a fortiori, any other amount which is calculated not for providing such taxable service cannot a part of that valuation as that amount is not calculated for providing such taxable service . That according to us is the plain meaning which is to be attached to Section 67 (unamended, i.e., prior to May 1, 2006) or after its amendment, with effect from, May 1, 2006. Once this interpretation is to be given to Section 67, it hardly needs to be emphasised that Rule 5 of the Rules went much beyond the mandate of Section 67. We, therefore, find that High Court was right in interpreting Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service. Thus, only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax. Though, it was not argued by the Learned Counsel for the Department that Section 67 is a declaratory provision, nor could it be argued so, as we find that this is a substantive change brought about with the amendment to Section 67 and, therefore, has to be prospective in nature. On this aspect of the matter, we may usefully refer to the Constitution Bench judgment in the case of Commissioner 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 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecause aforesaid legal position clearly emerges from the various decisions and this legal position was conceded by the counsel for the parties. In any case, we shall refer to few judgments containing this dicta, a little later. 30.As a result, we do not find any merit in any of those appeals which are accordingly dismissed. Civil Appeal No. 6865 of 2014, Civil Appeal No. 6864 of 2014, Civil Appeal No. 4975 of 2016, Civil Appeal No. 5130 of 2016 and Civil Appeal Nos. 4536-4537 of 2016 31.In the aforesaid appeals, the issue is as to whether the value of free supplies of diesel and explosives in respect of the service of Site Formation and Clearance Service can be included for the purpose of assessment to service tax under Section 67 of the Act. These assessees had not availed the benefit of aforesaid Notifications Nos. 15/2004 and 4/2005. Therefore, the issue has to be adjudged simply by referring to Section 67 of the Act. We have already held above that the value of such material which is supplied free by the service recipient cannot be treated as gross amount charged and that is not the consideration for rendering the servi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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