The appellants, acting as clearing and forwarding agents,...

The appellants, acting as clearing and forwarding agents, recovered certain reimbursement expenditures incurred for transporting goods on behalf of their principals. These reimbursements were not included in the taxable value for service tax payment. The Commissioner (Appeals) held that the appellants received extra amounts from clients for providing services, disqualifying them as pure agents u/r 5 of the Service Tax (Determination of Value) Rules, 2006, requiring inclusion of such amounts in the taxable value. However, the Delhi High Court had previously declared Rule 5(1) ultra vires, contrary to Section 67 of the Finance Act, 1994. The transportation charges reimbursed to the appellants by principals were on an actual basis for transporting goods as pure agents and should not be included in the taxable value. Consequently, the impugned Order-In-Appeal was set aside, and the appeal was allowed by the CESTAT (Appellate Tribunal).