Reimbursable Expenditures excluded from Assessable Value; interest and penalties waived where tax remitted only after receipt amid genuine dispute.

Non-monetary reimbursements paid directly by the service receiver and not received as consideration by the service provider are not includable in assessable value for service tax; accordingly the tax demand on such reimbursements was set aside. Where tax liability was genuinely disputed and the provider remitted tax only upon receipt from the receiver, interest for delayed payment was held unsustainable and set aside. On the same factual matrix the imposition of late fee and penalty was not sustained and was waived, resulting in complete relief on these points.

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Issues: (i) Whether non-monetary consideration/reimbursable expenditures received by the service provider from the service receiver are includable in assessable value for levy of service tax; (ii) Whether interest confirmed for delayed payment of service tax is sustainable where receipt from the service receiver was delayed and liability was under dispute; (iii) Whether late fee and penalty imposed for delay/non-compliance should be sustained.

Issue (i): Whether non-monetary consideration/reimbursable expenditures received by the appellant from Airports Authority of India are includable in assessable value for levy of service tax.

Analysis: The Tribunal examined prior authoritative rulings including the decision of the Hon'ble Supreme Court on the interpretation of Section 67 and the Service Tax (Determination of Value) Rules which held that reimbursable expenses paid to the service provider are not includable in assessable value. The Tribunal also considered decisions of other benches of the Tribunal applying the same principle to security services provided to airport authority, and noted that the facilities in question were in the nature of reimbursements and their monetary value was not part of the consideration received by the service provider.

Conclusion: Non-monetary consideration in the nature of reimbursable expenditures is not includable in the assessable value. The demand of service tax of Rs.80,98,449/- confirmed on this count is set aside in favour of the assessee.

Issue (ii): Whether the interest demand for delayed payment of service tax is sustainable given that the appellant remitted tax only after receipt from the service receiver and the liability was under dispute.

Analysis: The Tribunal found that the appellant deposited the tax immediately upon receipt of the amounts from the Airports Authority of India, and that during the relevant period there was genuine uncertainty and dispute regarding liability to service tax on the services. The Tribunal applied earlier Tribunal precedent where interest was set aside in comparable factual circumstances and held that delay, if any, was not attributable to the appellant.

Conclusion: The interest demand of Rs.21,02,016/- for delayed payment is not sustainable and is set aside in favour of the assessee.

Issue (iii): Whether late fee and penalty imposed under the statute should be sustained.

Analysis: Having found that tax was remitted promptly upon receipt from the service receiver and recognizing the confusion prevailing during the period about liability, the Tribunal exercised leniency. It considered the factual matrix and relevant precedents in which similar levies were reconsidered in comparable cases involving the appellant organisation.

Conclusion: The late fee of Rs.33,500/- and penalty of Rs.10,000/- imposed under the statute are set aside in favour of the assessee.

Final Conclusion: The impugned adjudication order confirming demand of service tax, interest, late fee and penalty is set aside and the appeal is allowed, resulting in complete relief to the appellant on the decided issues.

Ratio Decidendi: Reimbursable or in-kind expenditures borne directly by the service receiver and not received as consideration by the service provider are not includable in the assessable value for service tax under Section 67 of the Finance Act, 1994; where tax is remitted only upon receipt from the receiver and liability was genuinely disputed, interest and penalisations are not sustainable and may be waived.

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