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TMI Blog2024 (9) TMI 1415X X X X Extracts X X X X X X X X Extracts X X X X ..... g to Rs. 15,27,818/- for the period from 2006-2007 to 2009-2010. The appellant during the course of audit itself and before issue of the show cause notice, has deposited an amount of Rs.8,06,956/- towards the short payment of the service tax detected by the department. 1.1 On the above premises, a show cause notice dated 27.09.2012, came to be issued, demanding the service tax of Rs.15,27,818/- under Section 73 (1) of the Finance Act, 1994. The provisions with regard to interest under Section 75 and Penal Provisions under Section 76 and 78 of the Finance Act, 1994 were also be invoked. The matter got adjudicated by the impugned Order-In-Original dated 28.03.2014 thereunder all the charges invoked in the show cause notice has been confirmed by the adjudicating authority. The appellant has approached Commissioner (Appeals) against the impugned Order-In-Original, however, the Commissioner (Appeals) vide his order dated 08.08.2014 had endorsed the impugned Order-In-Original and no relief was extended to the appellant. 2. The Ld. Advocate appearing for the appellant submits that the impugned Order-In-Original as well as Order-In-Appeal seeks to demand differential service tax only on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reported under 2018 (10) G.S.T.L. 401 (S.C.) wherein, the Apex Court has upheld the decision of the Hon'ble High Court of Delhi wherein, the provisions of the Rule 5 (1) of the Determination of the Value Rules, 2006 have been held ultra vires. The Ld. Advocate has thus tried to emphasize that actual reimbursement of the expenditure made by the service provider on behalf of the service recipient cannot be included in the taxable value of the services provided by him. The Ld. Advocate has also relied upon following decisions to support his argument:- * Star Freight Pvt. Ltd., Versus C.S.T.-Service Tax - Ahmedabad - 2023 (9) TMI 71 - CESTAT, Ahmedabad. * P.S. Murugesan Versus Commissioner of Central, Excise, Salem - 2018 (9) G.S.T.L. 99 (Tri.-Chennai). * Sangamitra Services Agency Versus Commissioner of C. Ex. Chennai - 2007 (8) S.T.R. 233 (Tri.-Chennai). * Gurubani Security Private Limited Versus DGGSTI, New Delhi - 2019 (8) Τ.Μ.Ι.80-CESTAT, New Delhi. 3. We have also heard the Ld. Department Representative, was reiterated the findings as given in the impugned Order-In-Appeal. 4. Having heard both the sides, we find that the appellant have been discharging their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lfilled in order to exclude the costs and expenditure, which is not the case here. Therefore, there is no question of excluding any amount from the total taxable value received by the Service provider from the service recipient on any count. The adjudicating authority has not taken into cognizance the provisions of Rules 5(1) and 5(2) of the Service Tax valuation Rules. 4.2 We find that as per the provisions of Rule 5 of the Service Tax (Determination of Value) Rules, 2006, the reimbursable expenses also need to be included in the value of taxable services rendered. However, this rule has been held to be ultra vires to section 67 by the Hon'ble Supreme Court in the case of Intercontinental Consultants & Technocrats Pvt. Ltd. as reported in 2018 (10) G.S.T.L. 401 (S.C.). Therefore, considering this settled position, we don't find any merits in revenue's appeal. 4.3 Now we take up assessee's appeal. We find that Ld. Commissioner has confirmed the Service tax demand of Rs. 2,38,293/- under "Business Auxiliary Service" on head of 'incentive charges'. The said incentive charges were received by the appellant for achieving business targets and for profit share from overseas agent fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Service Tax. It is not appearing from the show cause notice as to what goods or services the Respondent has promoted or helped to promote. The Appellate Commissioner also on the same ground has held that the demand being vague is not enforceable against the Respondent. We do not find any reason to infer any different view than expressed by the lower authorities as without specifying the activity and the nature of service of the Respondent he cannot be taxed. Further out of the seven clauses under Section 65(19) no clause has been pointed out under which the Respondent is liable for Service Tax." Similarly, in United Telecoms Ltd. v. Commissioner of Service Tax, Hyderabad [2011 (22) S.T.R. 571 (Tri. - Bang.)],. another Division Bench of the Tribunal observed as follows :- "6. We find that no demand can be confirmed against any person towards Service Tax liability unless he/it is put on notice as to its exact liability under the statute. In the show-cause notice basic to the proceedings, the impugned activities were proposed to be classified under BAS and BSS. This proposal was confirmed by the Original Authority. We find that this order is not in accordance with the law. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earance related activity, Paid to Fumigation Agency, Paid to insurance company, paid to Palletization Company, paid Statutory Charges, Transportation charges, paid for administrative expenses, paid for documentation undertaken to facilitate Shipping company activity etc. It is pertinent to reproduce the relevant definition of Business Support Services as provided in Section 65(104c) which is reproduced herein below: "support services of business or commerce" means services provided in relation to business or commerce and includes evaluation of prospective customer, telemarketing, processing of purchase orders and fulfilment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, [operational or administrative assistance in any manner], formulation of customer service and pricing policies, infrastructural support services and other transaction processing. Explanation - For the purposes of this clause, the expression "infrastructural support services" includes providing office along with office utilities, lounge, reception with competent personnel to hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2022 (63) G.S.T.L. 337 (Tri. - Del.) supra the tribunal held as under : "9. As far as the differential in ocean freight is concerned, the appellant buys space on ships from the Shipping Line and the Shipping Line issues a Master Bill of Lading in favour of the appellant. In turn, it sells the space to its customers and issues a House Bill of Lading to each of them. The first leg is the contract between the Shipping line and the appellant. The second leg is the contract between the appellant and its customers. Evidently, anyone who trades in any merchandise or service buys low and sells high and the margin is his profit. To earn this profit, he also takes the risk of being unable to sell. In the appellant's case, if the space on the ships which it bought cannot be sold to its customers fully, or due to market conditions, or is compelled to sell at lower than purchase price, the appellant incurs loss. In a contrary situation, it gains profits. This activity is a business in itself on account of the appellant and cannot be called a service at all. Neither can the profit earned from such business be termed consideration for service. Respectfully following Satkar Logistics, Nilja Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Thus extended period of limitation is also not invokable in the present matter and no penalty is payable." * In the case of UOI Vs. Intercontinental Consultants and Technocrats Pvt. Ltd. the Hon'ble Supreme Court has passed the following decision: "29. In the present case, the aforesaid view gets strengthened from the manner in which the Legislature itself acted. Realising that Section 67, dealing with valuation of taxable services, does not include reimbursable expenses for providing such service, the Legislature amended by Finance Act, 2015 with effect from May 14, 2015, whereby Clause (a) which deals with 'consideration' is suitably amended to include reimbursable expenditure or cost 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 sub ..... X X X X Extracts X X X X X X X X Extracts X X X X
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