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TMI Blog2019 (12) TMI 890X X X X Extracts X X X X X X X X Extracts X X X X ..... s clients. Learned counsel has submitted that so far as Rule 5 of the Service Tax (Determination of Value) Rules, 2006 (hereinafter referred to as 'the Rules') is concerned, the same was struck down by the Hon'ble Supreme Court in Union of India Vs. Intercontinental Consultants and Technocrats Pvt. Ltd. 2018 (10) G.S.T.L. 401 (S.C.). Hence, reimbursable expenses could not be included for calculating assessable value on which service tax is leviable. So far as the amount sought to be included for calculating service tax is concerned, the same was being deposited in the accounts of the labour, whereas, the appellant was only receiving commission for providing manpower. Learned counsel for the respondent has opposed the appeal and has submitted that the amount paid towards Provident Fund and ESI contribution was liable to be included towards gross amount while calculating the service tax liability as per Section 67 of the Finance Act, 1994 (hereinafter referred to as 'the Act') In support of his argument, learned counsel has placed reliance on decision of the Division Bench of Kerala High Court in Security Agencies Association Vs. Union of India & Others, W.A. No. 812/2012 decided o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax, it is prudent to look into the relevant provisions of Service Tax (Determination of Value) Rules, 2006. I find that in terms of Rule 5 of the Service Tax (Determination of Value) Rules, 2006, where any expenditure or cost is incurred by the service provider in the course of providing taxable service, all such expenditure or costs shall be treated as consideration for the taxable service provided or to be provided and shall be included in the value for the purpose of charging service tax on the said service. I further find that certain cases in which the commission, costs, etc. will be included or excluded are given in Rule 6 of the Service Tax (Determination of Value) Rules, 2006 and even in terms of this rule, the salary actually paid to the labour and PF & ESI deposited with the Government are not excludable from the consideration received from the service receivers by the assessee." While dealing with the controversy involved in the present case, the Tribunal has observed as under: "6. We find that the period of dispute, in this case, is from April, 2007 to March, 2012 and the show cause notice was issued on 27/09/2012. For issuance of show cause notice beyond the nor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure or costs'. It was submitted that there was no dispute that as per this Rule, all such expenditure or costs which are incurred by the service provider in the course of providing taxable services are to be treated as consideration for the taxable services provided or to be provided for arriving at valuation for the purpose of charging service tax, except those costs which were specifically excluded under subrule (2) of Rule 5. Submission was that since Section 67 specifically lays down the principle of gross amount charged by a service provider for the services provided or to be provided, Rule 5 did not go contrary to Section 67 as it only mentions what would be the meaning of gross amount charged. xxxxxxxxxxxxxxx 16. Mr. J.K. Mittal, Advocate, appeared for M/s. Intercontinental Consultants and Technocrats Pvt. Ltd. He argued with emphasis that the impugned judgment of the High Court was perfectly in tune with legal position and did not call for any interference. At the outset, he pointed out that the Parliament has again amended Section 67 of the Act by the Finance Act, 2015 w.e.f. May 14, 2015. By this amendment, explanation has been added which now lays down that c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 6370/2008 directly against Show Cause Notice dated 17-3-2008 resulting in the impugned judgment dated 30-11-2012 Transportation, office rent, office supplies and utilities, testing charges, document printing charges, travelling, lodging, boarding etc. (post 19-4-2006) Transportation, office rent, office supplies, office furniture and equipment, reports and documents printing charges etc. [Pre 19-4- 2006]. [pages 62- 64] 2 6090/2017 CST v. Intercontinental Consultants Period: 2007-2008 [post coming into effect of impugned Rule 5 on 1-6-2007] Demand: Rs. 1,50,62,017/- Show Cause Notice dated 24-10-2008 was issued on the basis of the earlier SCN dated 17-3-2008 for the subsequent period. O-I-O dated 2-3-2010 covered both SCNs dated 17-3-2008 & 24- 10-2008. Transportation, office rent, office supplies & Utilities, testing charges, document printing charges, travelling, lodging, boarding etc. [page 157] B. Share Transfer Agency Service: SI.No. Civil Appeal details Facts Reimbursable claimed as not includible 1 6866/2014 CST v. Through its Secretary Period: 1-4-2008 - 31- 3-2010 Demand: Rs. 13,83,479 Reimbursement of Expenses, out of pocket expenses, Postage expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rges, packing charges, transport charges, fumigation charges, insurance survey charges, original certificate charges [pages 62-62] Charges paid to: Steamer agent, Custom Freight Station, Airport Authority of India and Transporters [page 106-107] 6 7688/2014 CST v. Shree Gayatri Clearing Agency Period: 1-10-2003 to 31-3-2008 [pre and post coming into effect of the impugned Rule 5 on 1-6-2007] Demand: Rs. 9,65,652/- SCN issued on 21-4- 2009. O-I-A dated 31- 7-2013 set aside demand for the period 18-4-2006 - 31-3-2008 in view of circular dated 6-6-1997. Customs Examination Charges, Misc. Expenses, Sundry expenses, strapping and restrapping charges, documentation charges. 7 7685/2014 Comm. of Customs v. Ramdas Pragji Forwarders Pvt. Ltd. Period: 2004-05 & 2007-08 The Adjudicating Authority held that no Service Tax was payable on reimbursable amount prior to 18-4- 2006. The Circular dated 6-6-1997 lost its validity after introduction of Rule 5. Hence the ST was recoverable thereafter CMC charges, CON-COR, GSEC, Transportation charges, Air and sea freight, Custom Duty, Custom Cess, fumigation charges, bottom paper, wooden etc. handling charges, labour expenses, sundry charges, ai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prior to coming into effect of impugned Rule 5 on 1-6-2007] Demand: Rs. 24,70,790/- SCN dated 22-10-2008 Non-payment of Service Tax on the amount received as reimbursement by way of debit notes in addition to amount charged through invoices for providing 'Event Management Service', Section 65(40) and Section 65(90)(zu) [page83] Hiring of venue, merchandise, artists, travel, courier, food and beverages, administrative expenses, [page 76 @ 78] 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, the valuation was to be done as per the provisions of Section 67 of the Act. xxxxxxxxxxx 24. In this hue, the expression 'such' occurring in Section 67 of the Act assumes importance. In other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atutory 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-à-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. 28. 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 to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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