TaxTMI 
TaxTMI 
2020 (4) TMI 182
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....n the assessable value. Furthermore, sustenance has been drawn from the rule 5 of Service Tax (Determination of Valuation) Rules, 2006 mandating all expenditure/costs incurred for providing the services to be includable in the consideration. For the period prior to 1st July 2012, the chartering company had been discharging its tax liability as provider of 'supply of tangible goods' services. 2. In the show cause notice, it was proposed that, in addition to 'fixed charges' and 'flying hourly charges', 30,82,360 litres of 'aviation turbine fuel', valued at Rs. 26,03,43,725, had been consumed on 5973 hours and 34 minutes of flying which, having been excluded from the assessable value, be subject to tax amounting to Rs. 3,21,78,484. Aggrieved by the confirmation of this demand under section 73(1) of Finance Act, 1994, along with interest as prescribed in section 75 of Finance Act, 1994, besides imposition of penalty of like amount under section 78 of Finance Act, 1994, in order in-original no. MUM-SVTAX-006-COM-51-16-17 dated 15th December 2016 of Commissioner of Service Tax-VI, Mumbai, M/s Heligo Charters Pvt Ltd is now before us. 3. Urging us to disregard rule 5 of Service Tax (Det....
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....that the dispute before us is limited to the includability of cost of fuel supplied, or reimbursement for fuel made, by M/s ONGC Ltd with whom the appellant has entered into an agreement for charter of helicopters, in the taxable value of service that, for a short period at the commencement of the dispute, was subject to levy as 'supply of tangible goods' service. There was no dispute on any of the other charter agreements as these did not include such a provision. 6. In its commercial wisdom, the charter agreement entered into by M/s ONGC Ltd provided for the supply of 'aviation turbine fuel' for operation of the helicopters belonging to the appellant from Mumbai and from its offshore locations. At other places, the cost of fuel procured for operations was to be reimbursed by M/s ONGC Ltd. The impugned order has relied upon two different statutory provisions to confirm the differential tax arising from these two modes of fuel cost borne by the recipient of service. The supply of fuel was held to be a non-monetary form of consideration warranting the determination of its money equivalent as per section 67 of Finance Act, 1994. The reimbursement of cost incurred by the appellant fo....
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....rs (AOs), the Government issued the Notification No. 15/2004-S.T., dated September 10, 2004 as per which service tax is to be calculated on the value which is equivalent to 33% of the gross amount charged from any person by such commercial concern for providing the taxable service. This notification was amended vide another Notification No. 4/2005-S.T., dated March 1, 2005 whereby an explanation was added to the original notification. This explanation mentions that the 'gross amount charged' shall include the value of goods and material supplied and provided or used by the provider of construction services for providing such service. It is made optional for the assessees to take advantage of the aforesaid notification and get the value calculated as per the aforesaid formula provided therein. The assessees have availed the benefit and paid the service tax @ 33% of the gross amount which they have charged from the persons for whom construction was carried out, i.e., the service recipients. It so happened that in all these cases where the construction projects were undertaken by the assessees, some of the goods/materials (particularly, steel and cement) were supplied or provided by t....
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....only provides for the modes of the payment or book adjustments by which the consideration can be discharged by the service recipient to the service provider. It does not expand the meaning of the term "gross amount charged" to enable the Department to ignore the contract value or the amount actually charged by the service provider to the service recipient for the service rendered. The fact that it is an inclusive definition and may not be exhaustive also does not lead to the conclusion that the contract value can be ignored and the value of free supply goods can be added over and above the contract value to arrive at the value of taxable services. The value of taxable services cannot be dependent on the value of goods supplied free of cost by the service recipient. The service recipient can use any quality of goods and the value of such goods can vary significantly. Such a value, has no bearing on the value of services provided by the service recipient. Thus, on first principle itself, a value which is not part of the contract between the service provider and the service recipient has no relevance in the determination of the value of taxable services provided by the service provide....
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....appeal challenging the nullifying of rule 5(1) of Service Tax Rules, 1994, incorporated for the specific purpose of including 'reimbursable expenses' in 'gross amount charged' except in circumstances enumerated in rule 5(2), and the statutory provisions, the Hon'ble Supreme Court, finding that '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 thereupon. 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 authorities are to find what is the gross amount charged for providing 'such' taxable services. As a fortiori, any other amount which is calculated not for providing such taxable service cannot a part ....
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....t was conferred by the Act or whittle down its effect." 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' is suitably amended to include reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service. Thus, only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax. Though, it was not argued by the Learned Counsel for the Department that Section 67 is a declaratory provision, nor could it be argued so, as we find that this is a substantive change brought about with the amendment to Section 67 and, therefore, has to be prospective in nature. On this aspect of the matter, we may usefully refer to the Constitution Bench judgment in the ....