Actual reimbursement of depository fees excluded from taxable value; demand also failed on limitation for no suppression.

Actual reimbursement of NSDL/CDSL depository charges recovered from customers was not includible in the taxable value, because the Board's circular clarified that service tax was not leviable on such fees when recovered on an actual basis and there was no allegation that the recovery exceeded the amount paid to the depositories. The demand also failed on limitation, as it was raised beyond the normal period while regular ST-3 returns had been filed and no suppression of facts or misstatement was established. The demand was therefore set aside in full.

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Issues: (i) Whether the amount recovered from customers towards NSDL/CDSL fees was deductible from the value of taxable service. (ii) Whether the demand was barred by limitation.

Issue (i): Whether the amount recovered from customers towards NSDL/CDSL fees was deductible from the value of taxable service.

Analysis: The circular issued by the Board clarified that service tax was not leviable on depository fees paid and recovered from customers on actual basis. The assessee stated that the fixed charges paid to the depositories represented the actual charges recovered from customers. There was no allegation by the Revenue that the amount recovered exceeded the amount paid to the depositories.

Conclusion: The deduction was admissible and the demand on this ground was unsustainable, in favour of the assessee.

Issue (ii): Whether the demand was barred by limitation.

Analysis: The demand had been raised beyond the normal period. The assessee had been filing regular ST-3 returns, and no suppression of facts or misstatement was established.

Conclusion: The demand was barred by limitation, in favour of the assessee.

Final Conclusion: The demand was set aside and the appeal succeeded in full.

Ratio Decidendi: Amounts recovered as actual reimbursement of depository charges are not includible in the taxable value, and in the absence of suppression or misstatement, the extended period of limitation cannot be invoked.

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