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TMI Blog2025 (3) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... vice tax on the gross amount received from recipient of services (i) M/s. Bhilwara Chittorgarh DUSS Ltd., Bhilwara & (ii) M/s. Chittorgarh Pratapgarh DUSS Ltd., Chittorgarh. The appellant had received payments towards his commission and payment of labour including contribution towards PF & ESI, however service tax was paid only on the commission amount. 2. A Show Cause Notice C. No. V(ST)Adj-II/172/2013 dated 14.10.2013 was issued to the appellant towards demand of service tax of Rs.14,68,650/- along with interest and imposition of penalty under Section 76 of the Finance Act, 1994 the Act. 3. The matter was adjudicated vide OIO No. 25/Dem./2017 dated 06.06.2017 and it was held that service tax was also leviable on amount received by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 words, valuation of taxable services for charging service tax, the authorities are to find what is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arged, 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 substantive change brought about with the amendment to Section 67 and, therefore, has to be prospective in nature. On this aspect of the matter, we may usefully refer to the Constitution Bench judgment in the case of Commissioner of Income Tax (Central)-I, New Delhi v. Vatika Township Private Limited [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset. This principle of law is known as lex prospicit non respicit: law looks forward not backward. As was observed in Phillips v. Eyre [(1870) LR 6 QB 1] , a retrospective legislation is contrary to the general principle that legislation by which the conduct of mankind is to be regulated when introduced for the first time to deal with future acts ought not to change the character of past transactions carried on upon the faith of the then existing law. 29. The obvious basis of the principle against retrospectivity is the principle of "fairness", which must be the basis of every legal rule as was observed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered by him and the valuation of taxable service could not be anything more or less than the consideration paid for rendering such a service. Hence, substantial question of law framed in this appeal stands answered accordingly." 7. The period involved in the show cause notice is April 2012 to July 2012 and the demand has been made by virtue of Section 67 of the Act read with Rule 5 of the Service Tax (Determination of Value) Rules, 2006. In view of the law laid down by the Hon'ble Apex court in Intercontinental Consultants and Technocrats Pvt. Ltd., the demand made under Section 67 is not sustainable as it does not include the reimbursable expenses for providing such service during the period in question. 8. We do not find any merits in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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