Manpower-related reimbursements included in taxable value where costs formed part of the service provider's own delivery.

Salary, travelling and other manpower-related expenses recovered from the service recipient were treated as part of the provider's own cost of delivering business auxiliary, management, maintenance and repair services. Because the amounts were incurred for the appellant's manpower-driven service performance and were not shown to be expenses that should have been borne by the recipient, they were not accepted as deductible reimbursable expenses. The cited authorities were found inapplicable on these facts. The amounts were therefore included in the gross value of taxable services and subjected to service tax, with the order-in-appeal upheld.

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Issues: Whether salary, travelling and other manpower-related expenses recovered from the service recipient were excludible as reimbursable expenses or were includible in the gross value of taxable services.

Analysis: The appellant provided business auxiliary service and management, maintenance and repair service through its own manpower. The recovered amounts represented expenditure on salary, wages and travelling expenses of that manpower, which was part of the cost of providing the service. Such expenses were not shown to be amounts that ought to have been borne by the service recipient but were temporarily borne by the service provider. The authorities relied on by the appellant were held inapplicable on these facts.

Conclusion: The amounts were held to form part of the gross value of the services and were chargeable to service tax. The appeal was dismissed and the order-in-appeal was upheld.

Final Conclusion: Expenses intrinsic to the provider's own service delivery and incurred for its manpower are includible in taxable value and cannot be excluded merely by describing them as reimbursements.

Ratio Decidendi: Amounts recovered towards costs that are borne by the service provider as part of its own manpower-driven service delivery form part of the taxable value and are not deductible as reimbursable expenses.

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