TaxTMI 
TaxTMI 
2018 (11) TMI 27
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....enly considered it as a business auxiliary services earlier and taken registration under BAS and paid tax under BAS. He argued that Revenue is seeking to include certain reimbursements in respect of office establishments for sale of different product. 2.1 Ld. Counsel argued that they are basically managing the sale team on behalf of the service recipient to extend the business of service recipient and for that they were being paid management fee as a certain agreed percentage of the amount of management fee. However, they are also receiving reimbursements of salaries, rent and incentives. He argued that the same are not included in their profit and loss account as income or as expense in their Balance Sheet. Ld. Counsel argued that Rule 5 (2)(vi) of Service Tax (Determination of Value) Rules, 2006 has been invoked to include the value of reimbursement in the assessable value. Ld. Counsel relied on the decision of the Hon'ble Apex Court in the case of Intercontinental Consultant and Technocrats Pvt. Ltd. 2018(10)G.S.T.L. 401 (S.C.) to assert that no such inclusion of reimbursement can be made for arriving at the assessable value. Ld. Counsel also relied on the decisions of Tribunal....
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.... in the year 2009 was merely the continuation of earlier agreement and, therefore, the description of service provided as elaborated in the agreement of the year 2009 can be interpreted to be the nature of service provided under agreement of the year 2004. He further argued that the rent which has been claimed as reimbursable expense has nothing to do with ICICI Bank. He argued that the rent agreement is between the owner of the property and the appellant and not between the owner of the property and the ICICI Bank. In these circumstances, he argued, that rent cannot be considered as reimbursable expense as it was a liability of the appellant. He particularly relied on the clause 6(g) & (i) of the agreement which reads as follows: "(g) It shall provide such suitably qualified, experienced and competent personnel and sub-contrators as may reasonably be required for the performance of the services. If so requested by ICICI Bank, the Service Provider shall provide evidence of the previous experience, qualifications and competence of any personnel engaged in the performance of such services; (i) subject to the terms of this Agreement, shall be responsible for the selection, hiring, ....
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.... by them as taxable value without disclosing the gross amount received by them. In these circumstances there is a clear suppression of facts. Ld. AR further pointed out that the appellant had admitted the liability for the period April, 2008 onwards. He relied on the decision in the case of M/s Vasan Traders Vs. Commissioner of Central Excise And Service Tax Lucknow 2018-TIOl-2660-CESTAT-ALL wherein following has been observed: "5. As regards limitation, we note that admittedly the show cause notice stands issued by invoking the longer period of limitation. It is undisputed fact that for the subsequent years, the appellant had taken registration and had paid duty on the same very activities. Even though we consider the appellant's plea that the same was the mistake on the part of the assessee, we really fail to understand as to why the same very mistake was not done for the period in question. Once assessee entertains a bona fide belief that the services provided by him are taxable and starts paying tax on the same for the subsequent period, a legal obligation lies upon him to discharge his tax liability for the previous year also. The fact that the appellant started paying duty f....
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....dered the rival submission. First we take up the issue regarding the services provided by the appellant to ICICI Bank. There are two agreements on record. The agreement entered in the year 2004 and the agreement entered in the year 2009. The agreement entered in the year 2004, para 2 records the scope of services as follows: "SCOPE OF SERVICE The services to be provided hereunder by the Service Provider are more particularly described in Schedule A annexed hereto." However, under the Schedule A, only following has been mentioned: "SCHEDULE A SCOPE OF SERVICE Activities handled by the Service Provider and Guidelines issued by ICICI Bank." It is apparent that the contract does not specify the nature of services provided by the appellant. In these circumstances the scope of services has to be interpreted by the terms of this agreement and the agreement entered in the year 2009 which is practically identical and which clearly described the scope by service as follows: "8.1.3 The service provider shall perform/provide the following services: A) the relationship between ICICI Bank and the service provider shall be on a principal-Principal basis. The service Provider shall perf....
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....udits to check on compliance with labour regulations (PF, ESIC, etc.) 5. No re-imbursement for TDS deduction. Onus of getting the TDS certificate from IT authorities to lie with Modern Business Solutions." 4.1 The argument of the appellant that no conclusion regarding nature of services provided can be reached on the basis of scope of the agreement of 2009 is misplaced. A perusal of the agreement of 2009, clearly indicates that it is a continuation of earlier arrangement. The fact that agreement of 2004 does not at all describe the nature of service to be provided cannot be used by appellant in his favour in these circumstanced. It is apparent that the appellants were engaged in providing BAS where the remuneration was based on actual expenses by adding a percentage of margin over certain expenses. That does not convert the expenses into reimbursement. In terms of the decision of Hon'ble Apex Court in Intercontinental Consultant and Technocrats Pvt. Ltd. (supra) reimbursements cannot be included in the assessable value, however, what constitutes reimbursement has to be determined in light of the decision of larger bench in the case of Bhagawathy Traders (supra). The larger ben....
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..... The claim for reimbursement of salary to staff, similarly has to be considered as to whether the staff were actually employed by the service recipient at agreed wages and the service recipient was under obligation to pay the salary and it was out of expediency, the provider paid the same and sought reimbursement from the service recipient. 6.3 The various Circulars of the Board relied upon by the learned Advocate for the assessee clearly referred to amounts payable on behalf of the service recipient. For example, the Customs House Agent paying the Customs duty to the Customs Department, paying the charges levied by the Port Trust to the Prot Trust, paying the fee for testing to the Testing Organization are clearly on behalf of the importer/exporter and the same are recoverable by the CHA as reimbursement, that too on actual basis. These Circulars cannot be held to be in support of the claim of the assessee that they can split part of the amount as reimbursable expenses and the rest as towards service charges. 6.4 The claim for reimbursement towards rent for premises, telephone charges, stationery charges, etc. amounts to a claim by the service provider that they can render su....
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.... the agency. Annexure A reads as follows: "Annexure-A SCOPE OF SERVICES AND OBLIGATIONS OF THE AGENCY The Agency shall be responsible for the following" a) Recruit and deploy at each office one Admin Executive who will be responsible for all administration/HR issues pertaining to this contract at the said office. b) Recruit and deploy at its HO- needed people to be able to execute this outsourced contract. c) Assist TTSL to the best of its abilities in fulfilling the scope of the Services entrusted to it viz supply of suitable and adequate number of manpower (to meet the requirements of TTSL from time to time) for direct sales of the products by the TTSL‟s authorized personnel. d) The Admin Executive at each office shall collate the needed data required for the billing of fees payable under this Agreement (inclusive of incentive payable, conveyances, deductions if any, etc.) which will be duly approved by the TTSL‟s authorized personnel. e) On basis on this data the Agency shall raise the monthly bill for the contract and submit the same to TTSL‟s authorized personnel by every month. f) Once the accepted invoice is handed over by TTSL on the....
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....amount received in the returns filed by them. The Commissioner in his order has observed as follows: "26.1 It has been contended by M.s MBS that the demand is barred by limitation considering the fact that they were regularly paying service tax and filing ST-3 returns and the department was fully aware of their business activities, I find that M/s MBS had in the ST-3 returns, periodically filed by them, declared the category of Service provided by them; Gross amount received by them; Taxable Value and the Service Tax paid by them. I find that the Gross Amount declared in the ST-3 returns was the same as taxable Value, which clearly means that they had only declared the amount received by them towards the management fees and did not declare the total amount charged and received by them from ICICI bank and TTSL. They have also not declared the amount charged by them as 'Pure Agent' in the ST-3 returns. I observe that in the present system of self-assessment documents like invoices and other transaction details are not supplied to the Department. Moreover, M/s MBS did not furnish the required details of amount of taxable value to the Department, the intention will have to be believed....