Reimbursable expenses excluded from service tax value; outdoor catering abatement depends on verified reversal of input credit.

Reimbursable expenses were held not to form part of the taxable value for service tax, so the demand on that component was set aside. For outdoor catering service, reversal of input credit was treated as satisfying the non-availment condition for abatement, but entitlement depended on verification that such reversal had actually been made. The order was therefore modified to delete the demand on reimbursable expenses and to remand the abatement issue for limited factual verification, resulting in partial relief to the assessee.

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Issues: (i) Whether reimbursable expenses were includible in the taxable value for service tax; (ii) Whether abatement for outdoor catering service was available where input credit had been reversed.

Issue (i): Whether reimbursable expenses were includible in the taxable value for service tax.

Analysis: The liability on reimbursable expenses was examined in the light of the binding decision holding that such expenses do not form part of the taxable value for service tax purposes. Applying that principle, the demand raised on this component could not be sustained.

Conclusion: The demand relating to reimbursable expenses was set aside in favour of the assessee.

Issue (ii): Whether abatement for outdoor catering service was available where input credit had been reversed.

Analysis: The eligibility for abatement depended on satisfaction of the condition regarding non-availment of credit. Since reversal of credit would amount to non-availment for the purpose of the abatement condition, the assessee would be entitled to the benefit if the reversal was in fact made. Verification of that factual aspect was still required.

Conclusion: The assessee was held eligible for abatement if the credit had been reversed, and the matter was remanded for verification of that limited aspect.

Final Conclusion: The order was modified by deleting the demand on reimbursable expenses and by remanding the abatement issue for factual verification, leaving the assessee with partial relief.

Ratio Decidendi: Reimbursable expenses are not part of the taxable value for service tax, and reversal of inadmissible credit may satisfy an abatement condition based on non-availment of credit, subject to verification of the reversal.

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