2015 (10) TMI 1735 - AT - Service Tax

Appellant prevails in Service Tax dispute, penalties challenged, expenses excluded from taxable value upheld.

The Tribunal found the demand of Service Tax, interest, and penalties confirmed, but the failure to impose penalty under Section 76 of the Finance Act, ... Valuation - Additional service tax liability on reimbursement of expenses of postage – Appellant functions as Share Transfer Agent and Registrar to an Issue – Assesee contends postage paid by appellant is duty and cannot be a part of the taxable value – Revenue contends that penalties under section 76 shall be imposed as expenses of postage are incurred on services mentioned above. Held that:- Actual expenses incurred for postages and reimbursement of other expenses are not to be included in the value for discharge of Service Tax liability – Matter is squarely covered under the case of Link Intime Pvt. Ltd. Vs. Commissioner of Service Tax [2015 (7) TMI 591 - CESTAT MUMBAI] – Decided in favour of assessee. Issues:1. Confirmation of demand of Service Tax along with interest and penalties under Sections 77 & 78 of the Finance Act, 1994.2. Failure to impose penalty under Section 76 of the Finance Act, 1994.Analysis:1. The appellant contested the confirmation of demand of Service Tax, interest, and penalties, while the Revenue challenged the failure to impose penalty under Section 76 of the Finance Act, 1994. The appellant provided services of Share Transfer Agency and Registrar to an Issue and was registered with the Service Tax authority. Investigations revealed discrepancies in the calculation of taxable value, leading to a show-cause notice for short payment of Service Tax, interest, and penalties for a specific period. The appellant disputed the notice on merit and limitation grounds, but the adjudicating authority upheld the demand.2. The appellant's representative argued that the Service Tax liability arose due to the exclusion of postage and other expenses from the gross value for discharging the Service Tax liability. They contended that these expenses were incurred on behalf of the companies for various activities and should not be included in the taxable value. Referring to a previous Tribunal judgment, the representative emphasized that such expenses should not be part of the taxable value. On the contrary, the Revenue asserted that these expenses were essential for providing Share Transfer Agency and Registrar services.3. The Tribunal analyzed the submissions and records, focusing on whether the appellant should pay additional Service Tax on expenses like postage and other costs related to their services as a Share Transfer Agent and Registrar to an Issue. It was established that the appellant functioned as an agent for companies issuing shares and that the expenses in question were actual expenses incurred by them. The Tribunal referenced a previous judgment that clarified the non-inclusion of certain expenses in the taxable value, supporting the appellant's position.4. Considering the legal and factual aspects, the Tribunal found the impugned order unsustainable in law. Citing the previous Tribunal judgment, the Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal. Consequently, the Tribunal dismissed the Revenue's appeal. The judgment highlighted the inapplicability of including certain expenses in the taxable value for Service Tax liability, aligning with legal precedents and statutory provisions.This detailed analysis of the legal judgment showcases the issues raised, the arguments presented by both parties, and the Tribunal's decision based on legal interpretations and precedents.