Reimbursable expenses and service tax liability: appellate exclusion of reimbursements was held unsustainable in law.

Reimbursable expenses were held not to escape service tax liability merely because they were described as reimbursements. The Tribunal found that the appellate authority's annulment of service tax on that basis had no legal support and could not stand. Relying on its consistent view, the Tribunal restored the adjudication order and upheld the Revenue's position. The appellate relief excluding reimbursed amounts from tax was therefore rejected as unsustainable in law.

---

---

Issues: Whether reimbursed expenses were liable to service tax under the Finance Act, 1994, and whether the appellate order annulling service tax on such amounts was sustainable.

Analysis: The Tribunal found that the appellate authority had not intended to impose tax on reimbursable expenses, but the annulment of service tax on that basis was unsupported by law. Relying on the consistent view of the Tribunal, the order under challenge was held to be unsustainable and the adjudication order was restored.

Conclusion: The issue was decided against the assessee and in favour of Revenue; reimbursable expenses were not accepted as exempt from service tax in the manner held by the appellate authority.

Final Conclusion: The Revenue's appeal succeeded and the adjudication order was restored.

Ratio Decidendi: Reimbursable expenses cannot be excluded from service tax liability merely because they are described as reimbursements, where the appellate relief granting such exclusion is unsupported by law.

---