Service tax valuation excludes reimbursed expenses incurred for the principal, unless the statute expressly includes them.

For service tax valuation, only the consideration for the taxable service actually rendered can be included, and reimbursed expenditure incurred on behalf of the client does not become taxable value merely because it is recovered from the principal. The valuation provisions could not be expanded by a delegated rule, and the later legislative amendment was treated as a prospective substantive change. Reimbursable expenses such as freight, electricity, telephone and staff costs were therefore not includable in the taxable value for the period in question, and the demand could not be sustained.

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Issues: Whether reimbursable expenses incurred by a clearing and forwarding agent towards freight, electricity, telephone, staff cost and similar outlays, when reimbursed by the principal, are includable in the taxable value for service tax.

Analysis: The taxable value has to be confined to the consideration for the service actually rendered. Reimbursed expenditure incurred on behalf of the principal does not, by itself, acquire the character of remuneration or commission merely because it is received from the client. The settled position was applied that the valuation provisions in the service tax law do not authorise inclusion of such reimbursable expenses, and a rule framed under the Act cannot enlarge the charging or valuation provision. The later legislative amendment was treated as a substantive prospective change, confirming that such amounts were not part of the taxable value for the prior period.

Conclusion: Reimbursable expenses were not includable in the value of taxable services for the period in question, and the demand could not be sustained.

Final Conclusion: The appeal failed because the reimbursement amounts did not form part of the taxable value under the then-applicable service tax regime.

Ratio Decidendi: For service tax valuation, only the consideration for the taxable service actually rendered can be included, and reimbursed expenditure incurred on behalf of the client cannot be added unless the statute expressly so provides.

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