Customs, Excise and Gold Tribunal - Bangalore
Apco Agencies vs Commissioner Of Cus. And C. Ex. on 7 January, 2008
ORDER T.K. Jayaraman, Member (T)
1. This appeal has been filed against the Order-in-Appeal No. 119/2006-S.T., dated 31-5-2006 passed by the Commissioner of Customs and Central Excise (Appeals) Cochin.
2. The appellants are engaged in the services of Clearing and Forwarding Agent to M/s. Bell Ceramics Ltd., Gujarat. Besides the Commission for the services rendered to the principals, they received reimbursement of various expenses such as rent, loading and unloading, postage and telegraph, printing and stationary, telephone charges, sundry expenses etc. incurred by them for and on behalf of their principals. The Assistant Commissioner in his Order-in-Original dated 16-2-2006 demanded the service tax on the gross amount charged from the client for the services rendered, which includes the amount received as reimbursement for the period from 1-4-2001 to 30-9-2004 with interest. The appellants challenged the order before the Commissioner (Appeals). They relied on various case laws. However, the Commissioner (Appeals) upheld the Order-in-Original.
3. The appellants have filed a written submission and urged the following points:
(a) The additional demand on account of reimbursement received is equal to Rs. 1,64,301/-. It is well-settled that the reimbursements of expenses will not form part of taxable value and their inclusion is against the provisions of Rule 6 of Service Tax Rules.
(b) in E.V. Mathai & Sons v. CCE, Cochin it was held that transportation and other charges raised by way of a separate bill is not liable to be included in the value of taxable service.
(c) In S. jayasree v. CCE, Mangalore 2007 (6) S.T.R. 389 (Tri.-Bang.) it was held that Godown Rent and Staff Salary reimbursed is not to be included in taxable value.
(d) In Alathur Agencies v. CCE, Calicut 2007 (7) S.T.R. 402 (Tri.-Bang.) it was held that reimbursable expenses can not form part of taxable value and that the issue has been covered by a number of decisions of the Tribunal Benches.
(e) In Popular Cement Traders v. CCE, Cochin 2007 (5) S.T.R. 384 (Tri.-Bang.) the Tribunal while granting stay recorded a prima facie finding that rental, telephone charges, handling charges, electricity charges, salary to employees etc. are to be borne by the principals and are only reimbursed to the assessee.
(f) In Bhagyanagar Services v. CCE, Hyderabad 2006 (4) S.T.R. 22 (Tri.-Bang.) it was held that transportation charges is not to be included in the value of taxable service.
(g) The show cause is barred by limitation. The period of demand is from 1-4-2001 to 31-3-2004. Section 73 of the Finance Act provides that the notice demanding short-levy should be issued within one year of the relevant date. Relevant date has been defined in sub-section (6) of the Section 73 as the date of filing the periodical return. In terms of these provisions, the dates of limitation are as follows:
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Latest Date be-
Return Period Date of Filing of fore which
Return Show Cause Date of Show
should have Cause Notice
been issued
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April, 2001 to Septem- 28th January, 27th January, 14th June, ber, 2001 2002 2003 2005
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October, 2001 to 25th April, 2002 24th April, 2003 14th June, 2005 March, 2002
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April, 2002 to Septem- 25th October, 2002 25th October, 2003 4th June, 2005 ber, 2002
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October, 2002 to 25th April, 2003 24th April, 2004 14th June, 2005 March, 2003
------------------------------------------------------------------------------------ April, 2003 to Septem- 25th October, 2003 24th October, 2004 14th June, 2005 ber, 2003
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October, 2003 to March, 23rd April, 2004 22nd April, 14th June, 2005 2004 2005
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4. In the present case it can be seen from the above table, a show cause notice was issued beyond the latest date, before which the same should not been caused. There is also no reason for invoking the extended period as no finding has been recorded that the allowed short-levy was on account of fraud or collusion, wilful misstatement suppression of facts.
5. The learned Departmental Representative Shri Anil Kumar, reiterated the impugned order.
6. On a very careful consideration of the issue, find that these reimbursements are on account of Rent, Loading/Unloading, Packing/Repacking, Freight/Cartages, Octroi/Taxes, Other Expenses on actual like Telephone/Courier/Photocopying/Printed Stationery. The actual service charges received by the appellant is also mentioned in the contract. It is actually Rs. 2 per M2 up to 8000 M2 per month or Rs. 16,000/- whichever is higher. There are also further slabs. The contention of the appellant is that they are liable to pay service tax only for the charges received in respect of the services and not on the reimbursements. Rs. 12,000/- per month is the rent for the godown which is reimbursed by the principal. According to the appellant this amount does not represent the charges received for rendering services to their principals. There is no justification for levying service tax on this amount. Similarly, in respect of other reimbursements, the Commissioner (Appeals) held that the gross amount received is liable to service tax which includes all the reimbursements find that the case laws cited by the appellant have held that the reimbursements of actual expenses incurred on behalf of the appellants are not liable to service tax. Following the ratio of the cited case laws, I allow the appeal with consequential relief.
(Pronounced in open Court on 7-1-2008)