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of <h1>Tribunal excludes godown rent & staff salary from service tax calculation.</h1> <h3>S JAYASHREE Versus COMMISSIONER OF C. EX., MANGALORE</h3> S JAYASHREE Versus COMMISSIONER OF C. EX., MANGALORE - 2007 (6) S.T.R. 389 (Tri. - Bang.) , 2007 (80) RLT 913 (CESTAT - Ban.) Issues:Challenge to inclusion of godown rent and staff salary in service tax calculation.Analysis:The appellants contested the inclusion of godown rent and staff salary in the calculation of service tax, arguing that these expenses are reimbursed by the principal and should not be part of their gross receipts for tax liability. The representative cited a Mumbai Bench ruling stating that certain expenses, including staff costs, cannot be considered as taxable services. It was emphasized that these expenses do not form part of the taxable services provided. The representative also highlighted previous cases where similar expenses were excluded from the taxable value.The Departmental Representative (DR) referred to a case where inclusion of such elements in service tax calculation was upheld by the Commissioner (Appeals). However, the Tribunal held that expenses like godown rent and staff salary, which are not part of the taxable services, should not be subject to service tax. The Tribunal relied on the precedent set by the Mumbai Bench ruling and emphasized that the expenses in question were not service charges received by the appellants from their principals. The Tribunal distinguished the DR's citation as not binding and followed the principle established in the Smithkline Pharmaceuticals Ltd. case. Consequently, the Tribunal allowed the appeal, setting aside the previous order and providing any necessary relief.In conclusion, the Tribunal ruled in favor of the appellants, holding that godown rent and staff salary should not be included in the calculation of service tax. The decision was based on the principle that expenses unrelated to the taxable services provided should not be subject to service tax, as established by relevant case law.
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