The appellant was not liable to pay service tax on the...

The appellant was not liable to pay service tax on the expenditure reimbursed by group companies, as the expenses were not shown to be consideration for services rendered. The department failed to prove that the reimbursed expenses were artificially shown and were actually consideration for services. As per the Supreme Court's judgment in Intercontinental Consultants case and Section 67 of the Finance Act, 1994, service tax is leviable only on consideration for services rendered, not on reimbursement of expenses paid to third parties. The show cause notice did not dispute the nature of reimbursed expenses or their includibility for service tax. The appellant's plea regarding classification of services as 'Business Support Services' instead of 'Management Consultancy Services' was irrelevant to the impugned proceedings. The appeal was allowed.

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