Reimbursement of expenses excluded from service tax levy, making demand, interest and penalty unsustainable

Reimbursement of expenses received while rendering CHA services was held not to form part of the taxable value for service tax, following the Delhi High Court ruling in Intercontinental Consultants & Technocrats Pvt. Ltd. As the amounts were outside the levy, the demand for service tax, along with interest and penalty, was unsustainable and the appeal was allowed.

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Issues: Whether service tax, interest and penalty were payable on amounts received as reimbursement of expenses incurred while rendering CHA services.

Analysis: The dispute was covered by an earlier decision of the same Bench, which had relied on the Delhi High Court decision in Intercontinental Consultants & Technocrats Pvt. Ltd. The amounts received towards reimbursement of expenses were treated as not forming part of the taxable levy for the purpose of service tax.

Conclusion: The demand, interest and penalty were not sustainable and the appeal was allowed.

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