Service tax valuation excludes reimbursable expenses under section 67 in the pre-amendment regime.

Under the pre-amendment valuation regime, section 67 confined the taxable value of services to the gross amount charged for the service itself. Reimbursable expenses received by the service provider were not consideration for the taxable service and therefore could not be added to the taxable value. On that basis, service tax was not payable on such reimbursable expenses for the relevant period, and the demand was unsustainable.

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Issues: Whether service tax could be levied, for the relevant period, on reimbursable expenses received by a service provider while valuing taxable services under section 67.

Analysis: The relevant period was 2012-2013, and the dispute turned on the pre-amendment position governing valuation of taxable services. The binding principle applied was that, for section 67, the value of taxable service is confined to the gross amount charged for providing the service, and amounts not paid as consideration for such service do not form part of the taxable value. Reimbursable expenses received by the service provider therefore could not be added to the value of services for service tax purposes for the period in question.

Conclusion: Service tax was not payable on reimbursable expenses for the relevant period, and the demand could not be sustained.

Final Conclusion: The valuation adopted in the impugned order was legally unsustainable, and the assessee was entitled to relief.

Ratio Decidendi: For the pre-amendment regime, service tax valuation under section 67 is limited to consideration for the taxable service itself, and reimbursable expenses not constituting such consideration cannot be included in the taxable value.

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