Service tax not applicable on reimbursable expenses - Tribunal upholds decision

The Tribunal upheld the Commissioner (Appeals)' decision that service tax should not be imposed on reimbursable expenses received from principals, emphasizing that tax is applicable only on commission for agency services. The Tribunal remanded the matter to the Original Authority for further examination. It agreed that the longer period for tax assessment cannot be invoked. Ultimately, the Tribunal found no basis to interfere with the Commissioner (Appeals)' order and dismissed the revenue's appeal.

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Issues:
Demand of service tax on reimbursable expenses from principals

Analysis:
The issue in this appeal pertains to the demand of service tax on certain amounts received as reimbursable expenses from the principals of the appellants. The Department argued that the appellants had not discharged the service tax liability on the reimbursements, emphasizing that the fixed amount in the commission was not towards any reimbursable expenses. The Department contended that longer period cannot be invoked, expressing dissatisfaction with the findings of the Commissioner (Appeals).

On the contrary, the learned Commissioner (Appeals) highlighted that reimbursable amounts should not be included for calculating the service tax, clarifying that the tax is applicable only on the commission received for C&F agency services. The Commissioner (Appeals) remanded the matter to the Original Authority for further examination based on the evidence to be produced. The appellants' letter dated 29-10-1999 was referenced to demonstrate that the department was aware that the service tax was being paid only on the commission excluding the reimbursable amount.

Upon careful consideration, the Tribunal found that the Commissioner (Appeals) had correctly interpreted the legal position, referencing the appellant's letter to the Superintendent of Central Excise range. The Tribunal agreed with the Commissioner (Appeals) that the longer period cannot be invoked, but regarding the actual liability, the matter was remanded to the Original Authority. Consequently, the Tribunal concluded that there was no strong ground to interfere with the order of the Commissioner (Appeals) and dismissed the revenue's appeal.

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