2018 (7) TMI 1539

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....er, a law firm submits that the amounts paid to senior counsel for services rendered to third party clients in the form of representation in Courts etc., cannot be subjected to service tax levy under the Finance Act, 1994, in its hands. In this case, the impugned order, i.e. the order in original dated 31.03.2017 of the learned Assistant Commissioner relied upon Rule 5 of the Service Tax (Determination of Value) Rules, 2006 (hereafter referred to as 'the Rules') to hold that the reimbursement, by its clients to the petitioner, had to be included in the value of services that was subjected to levy. 2. The levy in this case was, for the first time, introduced on 01.09.2009 by insertion of Section 65(105)(zzzzm) of the Finance Act, 1994 by ....

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....ection 67(1)(i) together and harmoniously, it seems clear to us that in the valuation of the taxable service, nothing more and nothing less than the consideration paid as quid pro quo for the service can be brought to charge. Sub-section (4) of Section 67 which enables the determination of the value of the taxable service "in such manner as may be prescribed" is expressly made subject to the provisions of sub-section (1). The thread which runs through Sections 66, 67 and Section 94, which empowers the Central Government to make rules for carrying out the provisions of Chapter V of the Act is manifest, in the sense that only the service actually provided by the service provider can be valued and assessed to service tax. We are, therefore, un....

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....Court, in the following terms: "23) Obviously, this Section refers to service tax, i.e., in respect of those services which are taxable and specifically referred to in various sub-clauses of Section 65. Further, it also specifically mentions that the service tax will be @ 12% of the 'value of taxable services'. Thus, service tax is reference to the value of service. As a necessary corollary, it is the value of the services which are actually rendered, the value whereof is to be ascertained for the purpose of calculating the service tax payable. 24) In this hue, the expression 'such' occurring in Section 67 of the Act assumes importance. In other words, valuation of taxable services for charging service tax, the authori....