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CESTAT allowed the appeal and set aside the impugned order, concluding that reimbursable expenses recovered by a service provider are not includible in the taxable value where they satisfy the conditions of a "pure agent" under Rule 5(2) of the Valuation Rules read with Explanation 1. The Tribunal held the question is settled by the apex court's affirmation of the High Court's decision striking down Rule 5(1) as ultra vires the charging provisions, thereby excluding incidental expenditures borne and discharged by the client from service tax valuation. Accordingly, the appeal succeeds and the Revenue's demand insofar as such reimbursable expenses is dismissed.
CESTAT allowed the appeal and set aside the impugned order, concluding that reimbursable expenses recovered by a service provider are not includible in the taxable value where they satisfy the conditions of a "pure agent" under Rule 5(2) of the Valuation Rules read with Explanation 1. The Tribunal held the question is settled by the apex court's affirmation of the High Court's decision striking down Rule 5(1) as ultra vires the charging provisions, thereby excluding incidental expenditures borne and discharged by the client from service tax valuation. Accordingly, the appeal succeeds and the Revenue's demand insofar as such reimbursable expenses is dismissed.
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