Custom, Excise & Service Tax Tribunal
Kirloskar Pneumatic Co. Ltd vs Pune Iii on 13 January, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: ST/253/2009
[Arising out of Order-in-Appeal No: PIII/VM/2006/09 dated 21/09/2009 passed by the Commissioner of Central Excise (Appeals), Pune III.]
For approval and signature:
Honble Shri M.V. Ravindran, Member (Judicial)
Honble Shri P.R. Chandrasekharan, Member (Technical)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
Yes
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
Kirloskar Pneumatic Co. Ltd.
Appellant
Vs
Commissioner of Central Excise
Pune III
Respondent
Appearance:
Shri Prasad Paranjape, Advocate for the appellant Shri R.K. Das, Asstt. Commissioner (AR) for the respondent CORAM:
Honble Shri M.V. Ravindran, Member (Judicial) Honble Shri P.R. Chandrasekharan, Member (Technical) Date of hearing: 13/01/2015 Date of decision: 13/01/2015 ORDER NO: ____________________________ Per: M.V. Ravindran:
The appeal is directed against Order-in-Appeal No: PIII/VM/ 2006/09 dated 21/09/2009 passed by the Commissioner of Central Excise (Appeals), Pune III.
2. The issue in brief is that during the period April, 2003 to March, 2006, the employees of the appellant had incurred travel expenses while providing output service and the said travel expenses were recovered from the service-recipient but the appellant had failed to pay service tax on the said expenses recovered from the service-recipient as contemplated in terms of the explanations to Section 67 of the Finance Act, 1994. Hence a show cause notice dated 17/07/2008 was issued to appellant alleging contravention of the provisions of Section 68(1) read with Section 66 of the Finance Act and hence the recovery of service tax amounting to ` 1,11,103/- was demanded along with interest in terms of Section 73(1) and 75 of the Finance Act, 1994 respectively. Further, Sections 76, 77 and 78 were invoked for imposition of the penalty. Aggrieved by such an order of the adjudicating authority the appellant preferred an appeal before the first appellate authority. The first appellate authority, after following due process of law, upheld the order-in-original. Hence the appellant is before us.
3. The learned counsel for the appellant brings to our notice that the amounts which have been considered for service tax liability are expenses, reimbursed at actual, incurred by the employees for travelling to the site of the client for attending the service or repairing. He would draw our attention to the sample invoices which are produced today to fortify his submission. It was also submitted that in an identical issue, a coordinate bench of this Tribunal, in the case of Reliance Industries Ltd. vs. Commissioner of Central Excise, Rajkot 2008 (12) STR 345 has held that reimbursable expenses are not includable for service tax liability and submits that the said decision has been upheld by the honble apex Court by dismissing the Civil Appeal filed by the Revenue as reported in 2011 (23) STR J226 (SC). He would also submit that the judgment of the honble Delhi in the case of Intercontinental Consultants & Technocrats Pvt. Ltd. vs. Union of India 2013 (29) STR 9 has struck down the provisions of Rule 5(1) of Service Tax (Determination of Value) Rules, 2006 which provided for inclusion of reimbursable expenditure for the purpose of service tax liability.
4. The learned Departmental Representative would submit that provisions of Section 67 of the Finance Act, 1994 would indicate that the gross amount which is charged for rendering the services should be the value on which the appellant needs to discharge service tax liability and in case the appellant has collected any amount over and above the service charges which were billed by them, that amount being the amount for rendering services should have been considered for discharge of service tax liability.
5. Heard both the sides.
6. The issue involved in this case is regarding inclusion of an amount which has been received by the appellant as reimbursements of travelling expenses for discharge of service tax liability under the category of erection, commissioning and installation service. A perusal of the sample invoice produced by the learned counsel, it indicates separately the inspection and service charges as also the to- and-fro actual charges for travelling. We find that there is no dispute as to the fact that the appellant discharged appropriate service tax liability on the service charges billed by them for rendering services to the client. The amount which has been collected by the appellant seems to be travelling expenses incurred by the appellants engineers to visit the site of the client. We find force in the contention of the learned counsel that the issue is covered by the order of the coordinate bench of the Tribunal in the case of Reliance Industries Ltd. (supra). We reproduce the said order.
All the three appeals are being disposed of by a common order as they involved identical issue. The demand stands confirmed against the appellants on the ground that reimbursable charges incurred by the appellants for traveling allowances to consulting engineers are required to be included in the fees for services so paid by them, for the purpose of service tax. We find that the issue is no more res integra and stands settled by the following decisions of the Tribunal:
a) Scott Wilson Kirkpatrick (I) Pvt. Ltd. vs. C.S.T., Bangalore 2007 (5) STR 118 (Tri-Bang.)
b) Malabar Management Services Pvt. Ltd. vs. C.S.T., Chennai 2008 (9) STR 483 (Tri-Chennai)
c) M/s Autobindo Pharma Ltd. vs. C.C.E. & Customs, Visakhapatnam 2008-TIOL-679-CESTAT-Bang.
2. We also find that the Board vide its Service Tax instructions F.No.B. 43/5/97-TRU, dated 2.7.97 held in para 3.5 that the expenses incurred on account of reimbursable expenses shall not form part of the value of the taxable services. To the same effect is another instruction being Service Tax F.No.B11/98-TRU, dated 07/10/1998. The above order is upheld by the honble apex Court by dismissing the civil appeal filed by the Revenue, is directly applicable in the case on hand.
7. In view of the foregoing and the judicial pronouncements, we find that the impugned order is unsustainable in law and is liable to be set aside and we do so. The impugned order is set aside and the appeal is allowed with consequential relief, if any.
(Dictated in Court) (P.R. Chandrasekharan) Member (Technical) (M.V. Ravindran) Member (Judicial) */as 6