TaxTMI 
TaxTMI 
2019 (4) TMI 1268
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....ii) Profit, (iv) Communication Expenses, Travelling Expenses and (b) on other set of bills were raised for "actuals". In these bills, the following amounts were recovered : (i) Expenses towards travel and stay ; (ii) For hiring of Halls ; (iii) Gift ; (iv) Product samples. 2.2 They discharged payment of service tax in respect of amounts recovered under the "Project Cost". They did not discharge the service tax on amounts recovered under the "Actuals". The Department was of the view that the amount recovered under "Actuals" also should be included in the consideration for payment of service tax under "Market Research Agency Service". Accordingly, show-cause notice was issued proposing the recovery of service tax totally amounting to Rs. 12,97,618/- for the period from 01.10.1999 to 31.03.2004. 2.3 In respect of services rendered for the clients situated abroad, they received consideration for foreign exchange (in respect of clients situated in the country other than Nepal). In respect of the clients situated in Nepal, the consideration was received in Indian Rupees. The Department noticed that the appellant did not pay service tax on this amount received from forei....
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....ct samples etc. The amount incurred towards the above expenses are recovered at "actuals" duly supported by vouchers. He submitted that no service tax is payable on such out of pocket expenses. In this case, he referred to the CBEC Circular F.No.B/11/1/98-TRU dated 07.10.1998. In Para 7.4 of the said Circular, it has been clarified that reimbursible out of pocket expenses charged to the client on actual basis will not be liable to payment of service tax provided documentary evidences are available. Further, he relied on the decision of the Hon'ble Supreme Court in the case of Union of India Vs. Intercontinental Consultants and Technocrats Pvt. Ltd. reported in 2018 (10) GSTL 401 (SC) (Para 24 & 29). He submitted that the Apex Court has held that in terms of Section 67 of Finance Act, 1994, there is no scope for including reimbursable expenses for providing such services. Finally, he submitted that the demand for service tax on this ground may be set aside.. 4.2 Non-payment of service tax on certain foreign currency Receipts from other foreign clients He submitted that in respect of services provided to foreign clients, the consideration was received in foreign exchange in ....
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..... Ltd. Vs. CST : 2013 ( 32) STR 546 (Tri.-Mumbai) ; (f) Karvy Investors Services Ltd. Vs. CCEx. & S. Tax, : 2016 (43) STR 610 (Tri.-Hyd.). (vii) He submitted that the services provided to overseas clients should be considered as services consumed abroad and hence not liable for service tax even during the period 01.03.2003 to 19.11.2003 when there was no exemption notification. He submitted that as a corollary, even for the period 01.10.1999 to 28.02.2003 and 20.11.2003 to 31.03.2004, service tax would not be applicable on the foreign exchange receipts whether the Notification Nos.6/1999-ST and 21/2003-ST existed or not. Hence the appellants need not take recourse to the exemption notification to claim immunity from payment of service tax on the foreign currency receipts. Hence, demand of Rs. 47,89,548/- on the foreign currency receipts is not payable. (vii) He submitted that substantial part of the cenvat credit denied is for the reason that the credit was taken on the basis of photo copies of the documents and the originals were not available in their office at Kolkata for verification. In this connection, he submitted that all the cenvat credits were taken on the basis ....
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....imbursement received by the appellant from the customers for out of pocket expenses. This amount was received for hiring of hotel rooms, gift, purchasing product samples etc.; These amounts have been claimed from customers on "actuals" duly supported by vouchers. The question whether such reimbursable expenses should form part of the taxable value has been decided by the Hon'ble Supreme Court in the case of Intercontinental Consultants & Technocrafts Pvt. Ltd. (supra). The Hon'ble Apex Court, after detailed discussions, has held that the value of taxable services in terms of Section 67 does not include reimbursable expenses for providing such service until May, 2014-15, when Section 67 was suitably amended to make provision for the same. The observation of the Hon'ble Apex Court is reproduced below : "29. In the present case, the aforesaid view gets strengthened from the manner in which the Legislature itself acted. Realising that Section 67, dealing with valuation of taxable services, does not include reimbursable expenses for providing such service, the Legislature amended by Finance Act, 2015 with effect from May 14, 2015, whereby Clause (a) which deals with 'consideration' i....
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.... 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 character of past transactions carried on upon the faith of the then existing law. The obvious basis of the principle against retrospectivity is the 29. principle of "fairness", which must be the basis of every legal rule as was observed in L'Office Cherifien des Phosphates v. Yamashita-Shinnihon Steamship Co. Ltd. Thus, legislations which modified accrued rights or which impose obligations or impose new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect; unless the legislation is for purpose of supplying an obvious omission in a former legislation or to explain a former legislation. We need not note the cornucopia of case law avai....
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....ther expenses connected with providing services to foreign clients. We are of the view that such remittances will not incur the mischief of the proviso in Notification Nos.6/99 & 21/03 (supra). In this regard, we are guided by the intention of the Government not to tax "Export of Services". In any case, the appellant was fully entitled to make remittances in foreign exchange outside the country for legitimate business expenses as permitted by RBI from time to time. In the result, we find no justification to order payment of service tax on the export proceeds. This view finds supports in the various decisions cited by the appellant. In particular, we refer to the decision of the Tribunal in the case of SGS India Ltd. (supra), in which the Tribunal has observed as under : "8. The view taken by the Central Board of Excise and Customs vide Circular No. 66/2005-S.T., is that export of services would continue to remain tax-free even after withdrawal of Notification No. 6/94-S.T., dated 9-4-1999. The Board was examining the effect of withdrawal of Notification No. 6/99-S.T. This Notification exempted the taxable service specified in Section 65(48) of the Finance Act, 1994 provided to a....