Reimbursable expenses excluded from service tax value before valuation amendment, keeping toll tax and permit tax outside assessable turnover.

For the period before the valuation amendment expressly included reimbursable expenditure, amounts collected from customers towards toll tax and permit tax and remitted to State authorities were not part of the taxable value for service tax. The reimbursed sums were treated as third-party payments rather than consideration for the service, so they could not be added to the gross amount charged. As a result, the service tax demand was not sustainable and was set aside with consequential relief.

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Issues: Whether toll tax and permit tax collected from customers and remitted to the State authorities were includible in the taxable value of the service for levy of service tax.

Analysis: The period in dispute preceded the amendment that expressly brought reimbursable expenditure or cost within the valuation scheme. For the relevant period, reimbursable expenses were not part of the taxable value of services, and the amounts collected towards toll tax and permit tax could not be added to the gross amount charged for service tax purposes.

Conclusion: The disputed reimbursements were not includible in the taxable value, and the demand could not be sustained.

Final Conclusion: The assessee succeeded on merits and the demand was set aside with consequential relief as permissible under law.

Ratio Decidendi: For the period prior to the valuation amendment, reimbursable expenses paid or payable to third parties are excluded from the taxable value of service tax.

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