TaxTMI 
TaxTMI 
2018 (10) TMI 1155
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....ission on the same and offer the same to service tax. The appellant also incurred expenditure on behalf of the customer while offering the services and gets it reimbursed from the customer. Since it was only a reimbursement of expenses, the same was not offered to tax and the bank have not collected any tax from the customers. Based on the audit observation, a show-cause notice was issued alleging short payment of tax by the appellant. The contention in the show-cause notice was that the postal and telegram and swift charges collected by the bank as out of pocket expenses during the period from April 2005 to March 2010 were liable for service tax under the category of 'Banking and other Financial Services' and the same were liable to be included in the value of taxable services. Appellant contested the show-cause notice by filing a detailed reply alleging that the bank had not rendered any service under the category of 'Banking and Other Financial services' in relation to the charges reimbursed by the customers. The expenses incurred were debited to Profit and Loss Account of the Bank and on recovering the same from the customers the expenditure is offset by crediting this amount t....
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..... 5. After considering the submissions of both the parties and perusal of the material on record and the various decisions relied upon by the appellants cited supra, we find that the only issue to be decided in the present case is whether the reimbursement of expenses is to be included in the value of taxable service or not during the relevant period. This issue was examined by the Hon'ble Supreme Court elaborately in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. reported - 2018-TIOL-76-SC-ST and the Hon'ble Supreme Court has held that reimbursable expenses are not to be included in the value of taxable service for the purpose of service tax. It is pertinent to reproduce the relevant findings of the Apex Court which is reproduced herein below: "(21) Undoubtedly, Rule 5 of the Rules, 2006 brings within its sweep the expenses which are incurred while rendering the service and are reimbursed, that is, for which the service receiver has made the payments to the assessees. As per these Rules, these reimbursable expenses also form part of 'gross amount charged'. Therefore, the core issue is as to whether Section 67 of the Act permits the subordina....
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....b-section (4) of Section 67 empowers the rule making authority to lay down the manner in which value of taxable service is to be determined. However, Section 67(4) is expressly made subject to the provisions of subsection (1). Mandate of sub-section (1) of Section 67 is manifest, as noted above, viz., the service tax is to be paid only on the services actually provided by the service provider. 26) It is trite that rules cannot go beyond the statute. In Babaji Kondaji Garad, this rule was enunciated in the following manner: "Now if there is any conflict between a statute and the subordinate legislation, it does not require elaborate reasoning to firmly state that ST/490/2008-DB 7 the statute prevails over subordinate legislation and the byelaw, if not in conformity with the statute in order to give effect to the statutory provision the Rule or bye-law has to be ignored. The statutory provision ahs precedence and must be complied with." 27) The aforesaid principle is reiterated in Chenniappa Mudaliar holding that a rule which comes in conflict with the main enactment has to give way to the provisions of the Act. 28) It is also well established prin....
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....s also in the implication as to its meaning that arise by presumptions as to the intent of the maker thereof. 28. Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow's backward adjustment of it. Our belief in the nature of the law is founded on the bedrock that every human being is entitled to arrange his affairs by relying on the existing law and should not find that his plans have been retrospectively upset. This principle of law is known as lex prospicit non respicit: law looks forward not backward. As was observed in Phillips v. Eyre [(1870) LR 6 QB 1], a retrospective legislation is contrary to the general principle that legislation by which the conduct of mankind is to be regulated when introduced for the first time to deal with future acts ought not to change the charac....