2018 (5) TMI 608

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....ss amount of remuneration or commission received from their principals or clients. A show-cause notice was issued on 20.4.2005 for recovery of demand of Rs. 9,13,625/- along with interest and proposing penalties under Section 78 and 76 of the Finance Act, 1994. The matter was adjudicated and the entire demand, which was for the period 1.9.1999 to 31.3.2003, was confirmed along with interest; penalty of equivalent amount was imposed under Section 78; and penalty was also imposed under Section 76 of the Act. In appeal, the demand of service tax along with interest was confirmed and penalty under Section 78 was also confirmed. However, the penalty under Section 76 was waived by the Commissioner (A). Aggrieved from the order of Commissioner (A)....

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....on notional basis. 4. Heard both the sides and perused the records. 5. We find that the issue of whether reimbursement of expenses by the service provider on behalf of the service recipient is no longer res integra in view of the judgment of the Larger Bench in the case of Sri Bhagavathy Traders (supra) where this Tribunal has held as under: "6.2 Similar is the situation in the transaction between a service provider and the service recipient. Only when the service recipient has an obligation legal or contractual to pay certain amount to any third party and the said amount is paid by the service provider on behalf of the service recipient, the question of reimbursing the expenses incurred on behalf of the recipient shall arise....

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....charges, etc. amounts to a claim by the service provider that they can render such services in vacuum. What are costs for inputs services and inputs used in rendering services cannot be treated as reimbursable costs. There is no justification or legal authority to artificially split the cost towards providing services partly as cost of services and the rest as reimbursable expenses." 5.1 However, the learned Commissioner (A) has given a finding that the appellant has not produced any proof regarding reimbursable expenses received is actual. In their written submissions, the appellant have confirmed that "in the present case, it is not in dispute that various charges which were alleged by the Revenue to be includible in the taxable value ....