2012 (8) TMI 103 - AT - Service Tax

Inclusion of CMC charges in assessable value for service tax upheld, failure to disclose bars time-bar defense

The Tribunal upheld the Revenue's position that CMC charges should be included in the assessable value of CHA service for service tax purposes. The ... Inclusion of CMC charges to the assessable value of the CHA service – Held that:- As per the provisions of rule 5(1) of the said Rules 'any expenditure or cost that are incurred by the service provider in the course of providing taxable service are to be included in the value of the taxable service for the purpose of charging service tax - expenditure in respect of CMC charges is incurred by the appellants in discharging their primary responsibility as a CHA - CMC charges are to be included in the assessable value of the taxable service provided by the appellants. Limitation of Time bar - appellants never disclosed the fact that CMC charges are recovered from their customers in the ST-3 returns in which the statutory returns are filed by the assessee, wherein there is a separate column in which the assessees have to show the reimbursable expenses - no merit in the contention of the appellants in respect of time bar also - appeals are dismissed. Issues:Whether CMC charges are includible in the assessable value of CHA service for service tax purposes.Whether the demand for service tax is time-barred due to non-disclosure of CMC charges.Analysis:The appellants, Customs House Agents (CHA), challenged orders by the Commissioner of Service Tax regarding the inclusion of CMC charges in the assessable value of their service. The Revenue contended that as per rule 5(1) of the Service Tax (Determination of Value) Rules, 2006, all costs incurred in providing taxable service must be included in the value for service tax purposes. The appellants argued that CMC charges, separately charged to customers, should not be included as they are not part of CHA service and were reimbursed by customers. They claimed no intention to evade tax, citing double taxation due to CMC service already taxed. The Tribunal noted that rule 5 mandates including all costs in the taxable service value, including CMC charges incurred in providing CHA service. The non-disclosure of CMC charges in ST-3 returns, where reimbursable expenses should be shown, led to the rejection of the time-bar defense.The key issue was whether CMC charges should be part of the assessable value of CHA service for service tax. The Tribunal found the charges fall under rule 5(1) of the Valuation Rules, necessitating their inclusion in the taxable service value. As the appellants failed to disclose CMC charges in ST-3 returns, the time bar defense was dismissed. The Tribunal upheld the Revenue's position, emphasizing the statutory requirement to disclose such expenses. Consequently, the appeals were dismissed, affirming the inclusion of CMC charges in the assessable value and rejecting the time-bar defense due to non-disclosure in the statutory returns.