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of <h1>CESTAT Bangalore overturns service tax demand & penalty, ruling in favor of appellant.</h1> <h3>CARGOLINKS Versus COMMISSIONER OF C. EX., MANGALORE</h3> The CESTAT, Bangalore, allowed the appeal, setting aside the demand for service tax and penalty imposed on the appellant for not declaring the total value ... Valuation- Reimbursement of expenses- whether the appellant is liable to service tax on the amount collected by him from his customers, for the export charges paid to the port authorities? Held that- Service tax paid on turnkey basis. Departmental clarification that CHA can exclude reimbursable expenses from gross service charges and service tax payable on 15% of value when lump sum amount charged. Impugned order set aside The appellate tribunal CESTAT, Bangalore, consisting of Members T.K. Jayaraman and M.V. Ravindran, heard an appeal against a Central Excise order dated December 7, 2005. The appellant, during an audit, was found to have not declared the total value of services rendered or paid the full service tax from 1999-2000 to 2002-03. A show cause notice was issued for the differential service tax of Rs. 19,10,491/-. The adjudicating authority confirmed a lower amount of Rs. 1,21,143/- along with interest and imposed a penalty. The appellant appealed to the Commissioner (Appeals), who upheld the original order. The main issue was whether the appellant was liable for service tax on the amount collected from customers for export charges paid to port authorities. The tribunal reviewed the appellant's invoices and found that the charges for handling granite blocks were as per an agreed contract and that the appellant had discharged the service tax liability accordingly. The tribunal referred to a circular/trade notice dated 11-6-1997, which clarified that service tax should only be computed on gross service charges, excluding reimbursable expenses. Based on this, the tribunal set aside the demand for service tax and penalty, allowing the appeal. The decision was pronounced in court by the tribunal members.
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