Composite service contract taxable on gross consideration; deductions for VSAT allowances and delivery charges were rejected.

Service tax was held payable on the gross consideration received for clearing and forwarding services under a composite contract. Amounts described as VSAT allowances and delivery charges were treated as part of the taxable value, not deductible reimbursable es, because the transaction could not be split for tax purposes. The demand was therefore sustained and exclusion of the stated amounts was rejected.

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Issues: Whether service tax was chargeable on the gross amount received for clearing and forwarding services without excluding amounts described as VSAT allowances and delivery charges.

Analysis: The contract covered the entirety of the appellant's clearing and forwarding functions. The amounts claimed as deductions were treated as part of the taxable consideration and not as deductible reimbursable expenses. Applying the principle that a contract cannot be vivisected for tax purposes and that tax is attracted on the gross amount where the service is rendered under a composite arrangement, the demand was held to be sustainable.

Conclusion: The service tax demand on the gross amount was upheld and the appellant's claim for exclusion of the stated deductions was rejected.

Ratio Decidendi: Where a composite service contract governs the entire transaction, the taxable value is to be determined on the gross consideration received and the contract cannot be split to exclude amounts forming part of the service consideration.

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