TaxTMI 
TaxTMI 
2015 (10) TMI 859
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....o.2) Act, 2009, the definition of Taxable Service, viz., Business Auxiliary Service (BAS) was amended. The activities of the appellant in so far as the manufacture of Alcoholic Beverages on job work basis, was included in service tax net with effect from 1.9.2009. The appellants had challenged the constitutional validity of levy of the Service Tax on the manufacture of Alcoholic Beverages on job work basis, before the Hon'ble Bombay High Court by filing Writ Petition. The Hon'ble High Court by Order dtd 14.10.2010 was pleased to admit the Writ Petition and observed that the Revenue would be at liberty to proceed with the Show Cause Notice. In the meantime, four show Cause Notices were issued proposing demand of Service Tax alongwith interest and to impose penalties for the period from 23.11.2009 to 30.12.2012. By the impugned orders, the Adjudicating authority confirmed the demand of Service Tax alongwith interest and also imposed penalties and also appropriated the amount as deposited by the appellant. 3. The Learned Advocate on behalf of the appellant submits that they have already challenged the constitutional validity of levy of tax on the activities of manufacture of the go....
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.... 3. The CIABC has now sought clarification on the tax base on which the service tax would be chargeable after allowing the deduction provided in the Notification. In short, they want to know as to how many of the above 7 elements (para 2 above) would be includible in the value for the purpose of charging service tax. 4. For removal of doubts and with a view to avoid disputes on valuation, it is clarified that: a) Service tax would be payable on the bottling/job charges, distribution costs and other reimbursable. b) So far as inputs ie., raw materials and packing materials are concerned, one of the conditions of exemption notification No 39/2009-ST is that there should be documentary proof specifically indicating the value of these inputs. Therefore, service tax on the value of raw materials and packaging materials would be exempt only when such charges are specifically mentioned in the invoice raised/documents maintained by the CBU. c) As regards the statutory levies, namely, excise duty/VAT, they do not present any consideration for rendering the service. Whether such amount is paid by BO or by CBU, they have no nexus with the provision of service. As such, these levi....
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....echnocrats Pvt Ltd vs UOI - 2013 (29) STR 9 (Del) held that Rule 5(i) of Service Tax Valuation Rules, 2006 is repugnant to Section 66 and 67 of the Finance Act, 1994 and to that extent it is ultra vires. He submits that the decision of the Hon'ble Delhi High Court came after the Board circular and therefore, reimbursement expenses cannot be included in the taxable value. The Learned Authorised Representative on behalf of the Revenue submits that the decision of the Hon'ble Delhi High Court in the case M/s Intercontinental Consultants and Technocrats Pvt Ltd (supra) is in the context of the expenses such as telephone charges, air travel tickets, hotel accommodation etc. We find that the Hon'ble High Court had given such illustration to show how the boundaries of Section 67 are breached by the Rule 5(i) of the Service Tax Valuation Rules. It is observed that apart from travelling beyond the scope and mandate of the section, the Rule may also result in double taxation. If the expenses on air travel tickets are already subject to Service Tax and included in the bill, to charge service tax again on the expenses would certainly amount to double taxation. We find that Rule 5(i) of Service....
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....ther expenditure and costs which are incurred by the service provider "in the course of providing taxable service". What is brought to charge under the relevant Sections is only the consideration for the taxable service. By including the expenditure and costs, Rule 5(1) goes far beyond the charging provisions and cannot be upheld. It is no answer to say that under sub-section (4) of Section 94 of the Act, every rule framed by the Central Government shall be laid before each House of Parliament and that the House has the power to modify the rule. As pointed out by the Supreme Court in Hukam Chand v. Union of India, AIR 1972 SC 2427 :- 9. In view of the decision of the Hon'ble Delhi High Court, we hold the reimbursable expenses paid to the appellant in so far as cost and expenditure as stipulated under Rule 5(i) Service Tax Valuation Rules, 2006 can not be included in the taxable value. 10. The appellant contended that it is a new levy and therefore imposition of penalty cannot be sustained. The Learned Advocate submits that in respect of Show Cause Notice dtd 5.10.2010 penalty was imposed under Section 78 and 77 of the Act 1994. He further submits that in respect of the other ....
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....ee for such failure to comply with the requirements of law. Section 80 of the Finance Act 1994 provides penalty not to be imposed in certain cases notwithstanding it provides any thing contained in the provisions of Section 76, 77, 78 or Section 79, no penalty shall be imposable on the assessee for any failure referred to in the said provision, if the assessee proves that there was reasonable cause for the said failure. The relevant portion of the said decision in the case of Motor World (supra) is reproduced below: 13. Therefore, given the language of Section 80 of the Act, which confers discretion on the Service tax authorities not to impose penalty if there is reasonable cause in given case, the imposition of penalty under Sections 76, 77 and 78 is not automatic. The existence of grounds/ingredients postulated in the said provisions is a condition precedent for attracting penalty. Therefore, first, we have to find out whether in the facts of a given case whether those ingredients exist. Once it is held that those ingredients exist and the provisions are attracted, then if the language used in the said provisions do not leave any discretion in authority in the matter of imposi....