Custom, Excise & Service Tax Tribunal
M/S. Sindhu Cargo Services Ltd vs Cst, Chennai on 1 February, 2018
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
ST/535/2009
(Arising out of Order-in-Original No. 23/2009 dated 24.06.2009 passed by the Commissioner of Service Tax, Chennai).
M/s. Sindhu Cargo Services Ltd. Appellant
Vs.
CST, Chennai Respondent
Appearance Shri G. Natarajan, Advocate, for the Appellant Shri A. Cletus, ADC (AR) for the Respondent CORAM :
Honble Ms. Sulekha Beevi, Member (Judicial) Honble Shri B. RAVICHANDRAN, TECHNICAL MEMBER Date of Hearing/Decision: 01.02.2018 FINAL ORDER No. 40330/2018 Per: B. Ravichandran The appeal is against order dated 24.06.2009 of the Commissioner of Service Tax, Chennai. The appellant is in the business of Custom House Agent and Freight Forwarders. They were registered with the department and were discharging service tax on their activities. The officers conducted verification of accounts maintained by the appellants. After such verification it was noticed that for the financial year 2006-07 the appellant collected various amounts from their clients on which they have not discharged service tax. The appellant claimed these amounts as reimbursement of certain expenditure incurred on behalf of the clients. Since the amount received and the amount spent did not match and supporting evidences were not satisfactory, the said consideration was sought to be added in the taxable value of service tax. Similarly, the appellants rendered various business auxiliary services to their clients. Here also similar dispute arose regarding non-inclusion of various expenses/receipts in the taxable value. On these two issues proceedings were initiated and the original authority confirmed the service tax liability of Rs.98,08,647/- along with penalties on the appellants.
2. The Ld. Counsel appearing for the appellant submitted that upon scrutiny of the account maintained by them, the officers were satisfied with the accounts for the financial year 2002-03 to 2005-06, for the expenditure claimed as reimbursement they are not liable to pay tax. However, for the year 2006-07 noting the excess receipts, the Revenue denied the claim of reimbursement to exclude the tax liability. The Ld. Counsel submitted that detailed scrutiny of all the documents they have revealed that except in a few cases of such expenses are incurred on actual basis and got reimbursed on actual basis from their clients. These are expenditures to be incurred by the clients but borne by the appellant and later reimbursed. They are not to be included in the taxable value at the hands of the appellant. Only based on certain mismatch of such reimbursement, the Revenue considered all receipts not to be eligible of reimbursements. He submitted that the confirmation of tax liability based on Rule 5 of Service Tax Valuation Rules, 2006 is not tenable as the said Rule 5 (1) itself has been set aside as ultra vires of the Act by the Honble Delhi High Court in Intercontinental Consultants & Technocrats Pvt. Ltd. Vs. UOI 2013 (29) STR 9 (Del.). In addition to the same, he submitted in fact there were various other receipts which are not at all for taxable activities, which are included under BAS. Admittedly, neither the appellant submitted all the required documents nor the Revenue scrutinized in detail resulting in summary confirmation of tax liability under BAS. He pleaded for an opportunity to submit all the required documents to clarify their position regarding non tax liability of these receipts.
3. The Ld. AR submitted that exclusion from taxable value can be only with reference to actual reimbursement of expenditure which otherwise should have been incurred by the clients. This position has been repeatedly held in various decisions of the Tribunal as well as High Courts including Honble High Court of Madras. However, when the appellant could not satisfactorily prove that these are in fact reimbursement expenses, the original authority is correct in confirming the tax liability.
4. We have heard both sides and perused the appeal records.
5. The tax liability under both headings were now contested on the ground that these are not to be either added to the value of the taxable service or not at all liable to tax. Regarding exclusion of reimbursement expenses, it is clear that the said exclusion can be allowed on satisfactory proof of documents specifically to the effect that these are on actual basis as per the arrangement between the client and the appellant. This can be easily verified with the supporting documents to be submitted by the appellants. Similarly, the claim of the appellant that various receipts which were not at all to be taxed under any heading were added in the taxable value under BAS also requires verification. Admittedly, the documents were not fully available at the time of proceedings before the original authority. Now, the appellant assures that all the required documents will be submitted for the scrutiny of the original authority to his satisfaction. The receipts were not with reference to any taxable activity or on the basis of actuals reimbursed.
6. In view of the above factual position, we note that the impugned order as it stands cannot be sustained. Accordingly, the same is set aside, and the matter is remanded back to the original authority for a fresh consideration, keeping in view of the above observation. Adequate opportunity shall be provided to the appellant to submit all the required defense, before a decision is taken.
7. The appeal is allowed by way of remand.
(Order dictated and pronounced in the open Court)
(B. RAVICHANDRAN) (SULEKHA BEEVI C.S ) TECHNICAL MEMBER JUDICIAL MEMBER
BB
5