Pure agent valuation rule excludes reimbursed expenses only when statutory conditions are strictly satisfied.

Service tax valuation includes reimbursement amounts in the taxable value unless the assessee satisfies the pure agent conditions under the valuation rules. Section 67 of the Finance Act, 1994 requires tax on the gross amount charged, and Rule 5(2) of the Service Tax (Determination of Value) Rules, 2006 permits exclusion of third-party expenditure only where there is a clear contractual arrangement, authorisation to incur the expense on behalf of the recipient, and receipt of only the actual amount incurred. As those conditions were not met, broadcast personnel fees reimbursed by the service recipient formed part of the consideration for manpower supply services and were not excludible.

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Issues: Whether the reimbursement of broadcast personnel fees received by the appellant from the service recipient could be excluded from the taxable value as amounts received in the capacity of a pure agent, or whether service tax was payable on the entire consideration received for manpower supply services.

Analysis: Section 67 of the Finance Act, 1994 requires service tax to be levied on the gross amount charged for taxable service, subject to exclusions available under the valuation rules. Rule 5(2) of the Service Tax (Determination of Value) Rules, 2006 permits exclusion of expenditure incurred as a pure agent only when the prescribed conditions are satisfied. The appellant did not establish a contractual arrangement showing that it acted as a pure agent, nor did the transaction satisfy the conditions governing direct payment to the third party, authorization to incur expenditure on behalf of the recipient, or receipt of only the actual amount incurred. The broadcast personnel were engaged in the course of the appellant's manpower supply service, and the amount reimbursed by the recipient formed part of the consideration for that service.

Conclusion: The reimbursement of broadcast personnel fees was not excludible as pure agent expenditure, and service tax was payable on the full amount received from the service recipient.

Final Conclusion: The appeal failed and the demand confirmed in the impugned order was upheld.

Ratio Decidendi: Amounts received as reimbursement are includible in the taxable value where the assessee does not satisfy the statutory conditions for exclusion as a pure agent under the valuation rules.

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