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2019 (8) TMI 212

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..... actual basis by the service recipient 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 raise .....

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..... 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 Intercontinental Consultants and Technocrats Private Limited-2018 (10) GSTL 401 S&K Enterprises,-2008 (10) STR 171 Althur Agencies,-2007 (7) STR 402 SRI Sastha Agencies Pvt. Ltd.-2007 (6) STR 185 .....

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..... 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 services rendered by the assessees. More precisely, the issue is as to whether the value of goods/materials supplied or provided free of cost by a service recipient and used for providing the taxable service of construction or industrial complex, is to be included in computation of gross amount charged by the service provider, for valuation of taxable service. For valuation of taxable service, provision is made in Section 67 of the Act which enumerates that .....

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..... s 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 Sections 66 and 67 to say that in the valuation of taxable service, the value of taxable service shall be the gross amount charged by the service provider for such service and the valuation of tax service cannot be anything more or less than the consideration paid as quid pro qua for rendering such a service. 25.This position did not change even in the amended Section 67 which was inserted on May 1, 2006. Sub-section (4) of Section 67 empowers the rule making authority to lay down the manner in which value of taxable service is to be determined. However .....

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..... 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, 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-avis 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. 27. Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not .....

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..... nder 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 services. Therefore, value of free supplies of diesel and explosives would not warrant inclusion while arriving at the gross amount charged on its service tax is to be paid. Therefore, all these appeals are also dismissed. Transfer Petition (Civil) Nos. 1043-1045 of 2017 Transfer Petition (Civil) Nos. 1932-1934 of 2017 32.These transfer petitions are allowed and the writ petitions mentioned in the prayer clause, which are pending before the High Court of Madras, are transferred to this Court. 33.The transferred writs are also disposed of in terms of the judgment rendered above in Civil Appeal No. 2013 of 2014 and other connected matters. 7. From the above Supreme Court judgment it can be seen that it was held that actual charges towards the service provider will only be taxable .....

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