In the matter of MALABAR MANAGEMENT SERVICES PVT. LTD. Versus COMMR. OF Service Tax reported in 2008 -TMI - 3439 - CESTAT, CHENNAI, CESTAST held that;

"8. Thus the case law cited by Id. Counsel and the Board's clarifications are in support of the appellants' contention that service tax is not leviable on the payments received by them from ICICI Bank by way of reimbursements of expenses. Therefore, the demand of differential service tax raised by the Commissioner on the appellants in respect of Business Auxiliary Service rendered by them to M/s. ICICI Bank Ltd. during the periods of dispute cannot be sustained."

Though the disputed period was 2003 to 2005 and 2005-2006, (before introduction of Service Tax (Determination of Value) Rules, 2006) but since the matter has far reaching consequences, department preferred an appeal before the Supreme Court against the above order of the CESTAT. (2008 - TMI - 31007 - SUPREME COURT OF INDIA)

Reimbursement of expenses excluded from service tax - tribunal found tax demand unsustainable; departmental appeal filed. The tribunal held that reimbursement of expenses received from a principal bank does not attract service tax and that the Commissioner's demand for differential service tax on such reimbursements in respect of Business Auxiliary Service was unsustainable; the department has appealed the tribunal's order to the Supreme Court because the transactions predated the Service Tax (Determination of Value) Rules, 2006 and the ruling has broader valuation consequences.