Custom, Excise & Service Tax Tribunal
Geno Pharmaceuticals Ltd vs Commissioner Of Central Excise, Goa on 9 August, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No. ST/555/12-Mum (Arising out of Order-in-Appeal No. GOA/CEX/GSK/42/2012 dated 24.5.2012 passed by Commissioner of Central Excise & Customs (Appeals), Goa) For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) and Honble Mr. C.J. Mathew, Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== Geno Pharmaceuticals Ltd. Appellant Vs. Commissioner of Central Excise, Goa Respondent Appearance: Shri C.S. Biradar, Advocate, for appellant Shri V.K. Kaushik, Assistant Commissioner (AR), for respondent CORAM: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical) Date of Hearing: 9.8.2016 Date of Decision: 9.8.2016 ORDER NO Per: M.V. Ravindran
This appeal is directed against order-in-appeal No. GOA/CEX/GSK/42/2012 dated 24.5.2012.
2. Heard both sides and perused the records.
3. The appellant herein appointed an agent named Shri S. Gupta by an agreement dated 3.3.2006. The said agreement provided that the agent shall provide services of promoting and marketing of the product sold to M/s. Nebula Trading Co. in the interior parts of Myanmar and the expenses to be incurred for traveling tickets, telephone charges, postage, hotel accommodation, fooding etc.; appellant reimbursed the expenses incurred by Shri S. Gupta on the actuals as per the bills raised by Shri S. Gupta. It is the case of the Revenue that the appellant is liable to pay service tax under the reverse charge mechanism under the category of business auxiliary services as it is undisputed that Shri S. Gupta has rendered services of promoting and marketing of the appellants goods.
4. The learned counsel brings to our notice the factual matrix of the case and takes us to the e-mails which have been sent by Shri S. Gupta to the appellant. It is his submission that these e-mails indicate that they were actually reimbursable expenses. It is his further submission that the Honble High Court of Delhi in the case of Intercontinental Consults & Technocrafts Pvt. Ltd. reported in 2013 (29) STR 9 (Del.), has struck down the provisions of Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006, which mandated for inclusion of reimbursable expenses, also for paying the service tax liability.
5. The learned departmental representative reiterates the findings of the lower authorities.
6. In our considered view, the Revenue has no case on merits for more than one reason. Firstly, on perusal of the various e-mails sent by Shri S. Gupta to the appellant they clearly indicate that the said Shri Gupta has claimed tour expenses monthly and it indicates only the air fare, car hire, hotel charges and petrol charges incurred by him for a particular month. The said e-mails or the expenses statement seem to have been accepted by the Revenue authorities as they are claiming service tax on the amount claimed as reimbursement by Shri S. Gupta.
7. If the amounts which are claimed by Shri S. Gupta, are actual expenses, we find that the said amounts cannot be considered as taxable under business auxiliary services, as under the category of BAS, the amount can be taxed as a commission paid by the appellant, if any, to Shri S. Gupta. On perusal of the agreement entered into by the appellant with Shri S. Gupta, we find that there is no mention of any commission payable to Shri S. Gupta by the appellant. If the appellant has not paid any commission and has only reimbursed the actual expenses incurred, in our view, the judgment of the Honble High Court of Delhi in the case of Intercontinental Consults & Technocrafts Pvt. Ltd. (supra) will directly apply and the said expenses cannot be taxed under business auxiliary service.
8. In view of the foregoing, we hold that the impugned order is unsustainable and liable to be set aside and we do so.
9. The impugned order is set aside and the appeal is allowed with consequential relief, if any.
(Pronounced in Court) (C.J. Mathew) Member (Technical) (M.V. Ravindran) Member (Judicial) tvu 1 4 ST/555/12