Reimbursable expenses cannot be added to service tax value; extended limitation fails absent suppression or wilful misstatement.

Reimbursed insurance premium and workmen compensation expenses, incurred by the service provider on behalf of the service receiver, were held not to form part of the taxable value under Section 67 of the Finance Act, 1994. Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006 could not widen the charging provision, and valuation of taxable services was confined to the consideration for the service itself. On limitation, the record did not show fraud, suppression, misstatement, or any positive act, so the extended period was not invocable and the demand for the earlier period was time-barred. The appeals were allowed in favour of the assessee.

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Issues: Whether reimbursed insurance premium and workmen compensation expenses formed part of the taxable value for service tax under Section 67 of the Finance Act, 1994 read with Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006, and whether the extended period of limitation was invocable.

Analysis: The reimbursed expenses were incurred by the service provider on behalf of the service receiver and were sought to be added to the gross value under Rule 5(1). The rule had already been held to travel beyond the charging provision in Section 67, and the Supreme Court had affirmed that the valuation of taxable services cannot exceed the consideration paid for the service itself. On limitation, the record did not establish fraud, suppression, misstatement, or any positive act to justify invocation of the extended period.

Conclusion: The reimbursed amounts were not includible in the taxable value, and the demand for the period prior to 30.09.2010 was time-barred. The appeals were allowed in favour of the assessee.

Ratio Decidendi: Reimbursable expenses not charged as consideration for the taxable service cannot be included in valuation under Section 67 of the Finance Act, 1994, and the extended period cannot be invoked absent proof of suppression or wilful misstatement.

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