Service tax valuation excludes reimbursed wages and worker-related outgoings from the taxable value for manpower supply services.

For manpower recruitment or supply agency service, valuation under Section 67 of the Finance Act, 1994 is confined to the consideration for the taxable service, and reimbursement-style amounts such as wages, salaries, allied expenses and statutory contributions paid for workers are not to be added to the assessable value. The note states that amounts incurred as a pure agent, or sums akin to reimbursed labour costs, are excludible from service tax computation. On that basis, the impugned demand was described as unsustainable because the disputed reimbursements could not form part of the taxable value.

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Issues: Whether the value of taxable service for manpower recruitment or supply agency service includes reimbursement of wages and other expenses paid to workers, and whether such reimbursed amounts are excludible while computing service tax liability.

Analysis: The demand had been confirmed on the footing that the gross amount received by the appellant included wages and allied expenses paid for deployment of labour. The Tribunal applied the settled position that, for valuation under Section 67 of the Finance Act, 1994, only the consideration for the taxable service can be brought to charge and amounts incurred as a pure agent or amounts akin to reimbursed wages and statutory contributions cannot be added to the assessable value. Following the cited precedents, the Tribunal held that wages, salaries, and similar outgoings paid for workers were not liable to be included in the taxable value.

Conclusion: The appellant was entitled to exclusion of the wages and related reimbursements from the assessable value, and the impugned demand orders were unsustainable.

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