2007 (8) TMI 90 - AT - Service Tax

Tribunal rules in favor of appellants, exempts service tax on reimbursable expenses

JAYLAXMI ENTERPRISES Versus COMMISSIONER OF C. EX, MANGALORE

The Tribunal held that the services provided by the appellants were rightly classified as 'C & F Agents' and not 'Del Credere.' It concluded that the ... Valuation(Service tax) - Appellant is of the view that they are not liable to pay service tax on the whole amount received from their principal and deduction would be available on the reimbursable expenses - Tribunal allowed the appeal Issues:1. Classification of services provided by the appellants under the category of C & F Agents for Service Tax.2. Treatment of reimbursable expenses collected from clients in relation to Service Tax liability.Analysis:1. The appeal was filed against the Order-in-Appeal (OIA) passed by the Commissioner of Central Excise (Appeals) alleging non-payment of Service Tax under the category of C & F Agents. The appellants contended that their services should be classified as 'Del Credere' and not as C & F Agents. However, the Commissioner (A) held that the services provided by the appellants were rightly classified as 'C & F Agent' and that 'Del Credere' was just one aspect of the services rendered. The Tribunal examined the agreement between the appellants and their principals, which clearly stated the appointment of the appellants as 'C & F Agents.' The agreement also outlined reimbursable expenses to be paid by the principal, including fixed reimbursements and commissions based on the quantity of cement handled. The Tribunal concluded that the entire amount received by the appellants should not be subjected to Service Tax and held that the appellants were liable for deduction of the reimbursable expenses. The Tribunal allowed the appeal, stating that the appellants were not liable to pay Service Tax on the reimbursable expenses.2. The Tribunal considered the reimbursable expenses collected by the appellants from their clients and the Service Tax already paid by the appellants. The Tribunal noted that the appellants had paid Service Tax and interest but held that they were not liable to pay Service Tax on the reimbursable expenses. The Tribunal allowed the appeal of the appellant with consequential relief, emphasizing that deductions should be given for all reimbursable expenses. The operative portion of the order was pronounced in open court at the conclusion of the hearing.