Court rules chartered accountant expenses exempt from service tax.

The Court set aside the order upholding non-payment of service tax on reimbursable expenses for chartered accountant services. The Tribunal ruled in favor of the appellant, citing that reimbursed expenses like conveyance, travelling, and mobile expenses should not be subject to service tax as they do not form part of the taxable services' value. The Commissioner (Appeals) erred in confirming the demand for service tax on these expenses, as per the Supreme Court judgment in Union of India vs. Intercontinental Consultant and technocrats. The appeal was allowed, and the appellant's position was upheld.

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Issues:
Quashing of order upholding non-payment of service tax on reimbursable expenses.

Analysis:
The appellant provided "chartered accountant services" and disputed the non-payment of service tax on expenses like conveyance, travelling, and mobile expenses. A show cause notice was issued in 2008, alleging non-payment of service tax on reimbursed expenses. The Assistant Commissioner confirmed the demand, stating that the appellant undervalued its income by not including reimbursed amounts in gross value. The Commissioner (Appeals) upheld this decision, noting the lack of direct nexus between reimbursed expenses and services provided, and the failure to reflect expenses in returns or invoices.

The Tribunal adjourned the matter when the appellant did not appear, and later decided the case in favor of the Department. The issue of reimbursable expenses was analyzed in light of the Supreme Court judgment in Union of India vs. Intercontinental Consultant and technocrats. The Court clarified that service tax could not be levied on reimbursed expenses, as they do not form part of the value of taxable services. Therefore, the Commissioner (Appeals) erred in subjecting reimbursable expenses to service tax. The order upholding the non-payment of service tax on reimbursable expenses was set aside, and the appeal was allowed.

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