TaxTMI 
TaxTMI 
2017 (11) TMI 547
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....d separate invoices to its recipient for reimbursable costs and professional fee. 3. Examination of records during audit, further revealed that the appellant had paid Service Tax only on the categories (ii) and (iii) of the invoices mentioned above. Moreover, in case of taxable service provided by the appellant to its foreign clients in India, (for which payments were received in convertible foreign exchange) the appellant had failed to pay Service Tax. 4. The Department was of the view that service tax was required to be paid on the gross amount charged by the service provider including the reimbursable cost. Accordingly, show cause notice was issued and, vide the impugned order, service tax amounting to Rs. 3,57,75,512/- was demanded along with cess of Rs. 4,59,129/-. The adjudicating authority also levied interest as well as penalties under various sections of the finance Act 1994. Aggrieved by the impugned order the present appeal has been filed. 5. With the above background, we have heard Shri Nagheshwar Rao, Advocate for the appellant and Shri Govind Dixit, DR for the respondent. 6. The Ld. Counsel argued the case of the appellant which is summarized as follows: ....
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....ted says that; "Nothing in this agreement shall be deemed to create a partnership/ employer-employee relationship between the parties hereto nor shall constitute any party the agent of the other party for any purpose and further this Agreement is on a principal to principal basis with each of the parties being liable and being responsible for their respective actions" The appellant did not have the legal capacity to act as "pure agent" and did not fulfill the conditions of "pure agent" under the relevant Rule as held by the adjudicating authority. ii) During the course of arguments, the advocate for the appellant relied upon a decision of the Hon'be Delhi High Court in the case of M/s Intercontinental Consultants & Technocrats Pvt. Ltd. Vs Union of India reported as 2013 (29) S.T.R.9 (Del.) dated 30.11.2012. Paras 4&5 of the Hon'ble High Court's judgment reveal that the Writ Petition was filed in the context of Rule 5 (1) of the Service Tax (Determination of Value) Rules, 2006 which had been invoked in that Show Cause Notice (SCN). Prayer was made to the Hon'ble High Court to quash the Rule, declare it as ultra vires and consequently quash the SCN itself. The judgmen....
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....recipient shall arise." In the same decision, in para 6.4, the Larger Bench has further explained that; "What are costs for input services and inputs used in rendering services cannot be treated as reimbursable costs. There is no justificaton or legal authority to artificially split the cost towards providing services partly as cost of services and the rest as reimbursable expenses." On the basis of submissions in the preceding paras, the impugned Order confirming demand of tax and cess and imposition of penalty deserves to be wholly upheld. 8. Heard both the sides and also perused the record. 9. The appellant provides event management services and recovers consideration from the service receivers. The department noticed that the appellant has paid service tax on the full value of service received in certain cases. In certain other cases the appellant has issued separate invoices for professional fee as well as reimbursable cost, but paid service tax only on the professional fee. The case of the revenue is that service tax is payable on the gross amount charged by the service provider, including the expenses incurred by the appellant and subsequently reimbursed....
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....ue of credit notes or debit notes and 2[book adjustment, and any amount credited or debited, as the case may be, to any account, whether called "Suspense account" or by any other name, in the books of account of a person liable to pay service tax, where the transaction of taxable service is with any associated enterprise." 11. The period involved in the present case is from Oct 2002 to March 2007. It covers the period covered under old and new section 67. For the period prior to 01.05.2006, the question for decision is whether the amount reimbursed are to be considered as part of the gross amount charged by the service provider from the service receiver. We have perused some of the sample invoices issued by the appellant for reimbursement of cost. These relate to for example hiring of equipments, hiring or purchase of equipments, hiring the service of other service providers to deliver the event management service, etc. By considering the nature of service provided by the appellant, we are of the view that all such expenditure would go towards provision of event management services by the appellant. The service itself cannot be completely rendered without such equipments or serv....
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....ot be entitled to exclude expenses incurred. 16. The appellant has relied on the decision of the Hon'ble Delhi High Court in the case of Intercontinental Consultants (Supra), in which the Hon'ble Delhi High Court has held as ultra vires Rule 5 (1) of the Service Tax Rules. After carefully considering the decision of Hon'ble High Court of Delhi we are of the view that the same is to be considered in line with the observations of the Tribunal in the case of Neelav Jaiswal & Brothers Vs. CCE Allahabad - 2014 (34) STR 225 (Tri-Del) in which the Tribunal has observed as follows: "Shri B. Laxminarasimhan, ld. Counsel for the appellants refers to the decision of the High Court of Delhi in Intercontinental Consultants & Technocrats Pvt. Ltd. v. UOI reported in 2013 (29) S.T.R. 9 (Del.) to support his contention that under Section 67 of the Act the value of a taxable service can only be the gross value received for providing such service and not any amount in excess of the consideration received as quid pro quo from the service recipient. We are in respectful agreement and are also bound by the principle delineated in the judgment of the High Court of Delhi but such resonance to this ....