TMI Blog2020 (1) TMI 1232X X X X Extracts X X X X X X X X Extracts X X X X ..... t for any service provided under the said agreement - It is an undisputed fact on record that over and above the amount agreed upon towards service charges, the appellant did not obtain any monitory benefit for providing any taxable service and that the amount of reimbursement towards the expenses received by the appellant towards different charges was not in connection with provision of the service under the taxable category of C F Agent service. Thus, such reimbursable amount should not be included in the gross value for the payment of service tax. It is also an admitted fact on record that the principal M/s. HUL has arranged for the transportation of goods and also paid the charges thereon to the transporter. As a corporate entity, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch principal on certain expenditure incurred on account of freight, rent, handling, halting charges etc. The department was of the view that under Rule 5 of the Service Tax (Determination of the Value) Rules, 2006, the appellant was required to discharge the service tax liability in respect of reimbursement amount received from the principal. Accordingly, department initiated show cause proceedings against the appellant, which culminated into the adjudication order dated 29.07.2015 (for short, referred to as the impugned order ), wherein Ld. Commissioner of Central Excise, Nagpur-II has confirmed service tax demand of ₹ 92,14,424/- along with interest and also imposed penalties under Section 77 and 78 ibid on the appellant. The impu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be included in the gross value for payment of service tax. 3. On the other hand, the Ld. AR appearing for Revenue reiterated the findings recorded in the impugned order. 4. Heard both sides and examined the case records. 5. In the case in hand, the appellant had entered into the agreement dated 01.04.2007 with the principal M/s HUL for warehousing the goods in the godown, belonging to them. Freight for inward movement of goods to the godown was borne by such principal and in case, any expenses were required to be incurred by the appellant in connection with movement of goods and meting other expenses, then the same was reimbursed by the principal to the appellant. The agreement also provides the scope of work to be performe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s an undisputed fact on record that over and above the amount agreed upon towards service charges, the appellant did not obtain any monitory benefit for providing any taxable service and that the amount of reimbursement towards the expenses received by the appellant towards different charges was not in connection with provision of the service under the taxable category of C F Agent service. Thus, such reimbursable amount should not be included in the gross value for the payment of service tax. 7. The constitutional validity of Rule 6 ibid, to the extent it includes reimbursement of expenses in the value of taxable service was challenged before the Hon ble Delhi High Court in the case of Intercontinental Consultants and Technocrafts Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to make rules for carrying out the provisions of Chapter V of the Act is manifest, in the sense that only the service actually provided by the service provider can be valued and assessed to service tax. We are, therefore, undoubtedly of the opinion that Rule 5 (1) of the Rules runs counter and is repugnant to Sections 66 and 67 of the Act and to that extent it is ultra vires. It purports to tax not what is due from the service provider under the charging Section, but it seeks to extract something more from him by including in the valuation of the taxable service the other expenditure and costs which are incurred by the service provider in the course of providing taxable service . What is brought to charge under the relevant Sections is onl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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