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TMI Blog2023 (9) TMI 809X X X X Extracts X X X X X X X X Extracts X X X X ..... .10.2005 and 21.12.2006 were issued to the Respondent demanding Service Tax of Rs. 1,57,68,416/-in total, including Education Cess. In the Notices, it has been alleged that the Respondent has paid Service Tax only on the remuneration/ commission received by them and not paid service tax on the reimbursements received from various clients. The Notices were adjudicated and the Adjudicating Authority has confirmed the total demand of Service Tax amounting to Rs.1,57,68,416/- along with interest and penalty vide OIO dated 30/11/2007. The Respondent preferred appeal before the CESTAT, Kolkata which vide its orders dated 26/03/2012 and 17/07/2014 remanded the case back to the Adjudicating Authority to decide the matter afresh taking into consideration the guidelines prescribed in respect of reimbursement by the Tribunal in the case of M/s Sri Bhagavathy Traders Vs CCE, Cochin, reported in 2011-24-STR 290. On Denovo adjudication, the Adjudicating Authority dropped the proceedings vide Orderin- Original dated 11.08. 2015. The present appeal has been filed by the department against dropping of the proceedings in the impugned order. 3. In their grounds of appeal, the Appellant submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of client's staff, other expenses like rent, telephone expenses, printing, postage, etc. They were under the bona-fide belief that reimbursement of expenses was never under the scope of levy of service tax. 6. They relied on the Board Circular F. No. B.43/7/97-TRU dated 11th July, 1997 wherein it was clarified that the value of taxable service rendered by a C&F Agent has been defined as the gross amount charged by such agents from the client for the services of clearing and forwarding operations in any manner. However, under service Tax rules it has been provided that the value of taxable service in relation to services rendered by clearing and forwarding agents to a client shall deemed to be the gross amount of remuneration or commission , by whatever name called, paid to such agent by the client engaging such agent. They stated that the C&F Agent receives commission or remuneration which usually consists of two components: i. Minimum commission on a flat rate or turnover basis depending on the packages/consignments handled; ii. A variable commission based on performance which is computed on the performance indicators agreed upon between the agent and the principal. This is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue shall be the gross amount charged by the service provider for such service provided. The Explanation which was inserted to aforementioned Section 67 defines 'Consideration' as below: "Consideration" includes any amount that is payable for the taxable services provided or to be provided; In the Union Budget 2015, all the reimbursement expenses have been included in the consideration with effect from 14/05/2015. Hence while calculating service tax, the service provider has to include all the expenses whatever he incurred for rendering service, w.e.f.14.04.2015 0nly and not before that period. The dispute in the present appeal pertains to the period from 2000-01 (October) to 2004-05 (September) and hence, the substitution brought in the definition of Consideration vide Finance Act, 2015 would not be applicable for the period in the present appeal. 9. The Respondent also placed their reliance on the Judgement of PHARMALINKS AGENCY (I) PVT. LTD. Versus COMMISSIONER OF C. EX., PUNE-III [2015 (37) S.T.R. 305 (Tri. - Mumbai)] wherein the CESTAT, Mumbai has held as under: "5.1 As regards the demand of Service Tax on freight charges, we notice that the service recipient h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Section 67(1)(i) together and harmoniously, it seems clear to us that in the valuation of the taxable service, nothing more and nothing less than the consideration paid as quid pro quo for the service can be brought to charge. Sub-section (4) of Section 67 which enables the determination of the value of the taxable service "in such manner as may be prescribed" is expressly made subject to the provisions of sub-section (1). The thread which runs through Sections 66, 67 and Section 94, which empowers the Central Government 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration with effect from 14/05/2015. Hence while calculating service tax, the service provider has to include all the expenses whatever he incurred for rendering service, w.e.f.14.04.2015 only and not before that period. The dispute in the present appeal pertains to the period from 2000-01 (October) to 2004-05 (September) and hence, the substitution brought in the definition of 'Consideration' vide Finance Act, 2015 would not be applicable for the period in the present appeal. 17. We observe that the issue has been decided by the Hon'ble Delhi High Court in the case of INTERCONTINENTAL CONSULTANTS & TECHNOCRATS PVT. LTD. Versus UNION OF INDIA [2013 (29) S.T.R. 9 (Del.)] which has been affirmed by the Hon'ble Supreme Court of India also in 2018 (10) G.S.T.L. 401 (S.C.). The gist of the decision is reproduced below: "Section 66 levies service tax at a particular rate on the value of taxable services. Section 67(1) makes the provisions of the section subject to the provisions of Chapter V, which includes Section 66. This is a clear mandate that the value of taxable services for charging service tax has to be in consonance with Section 66 which levies a tax only on t ..... 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