TaxTMI 
TaxTMI 
2023 (9) TMI 71
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....artment that service providers were collecting certain charges on which they were not paying service tax. On the basis of scrutiny of documents and investigation, the service provider have provided the ledger heads/activities which have not been considered as taxable services by them. Statements of Mr. Samir J Shah, Director was also recorded. It appeared that said service provider while performing the various activities supported the business of exporters, importers, CHAs etc. and had also earned commission or brokerage for booking space in aircrafts and shipping lines for their customers. It thus appeared that the said service provider had provided "Business Auxiliary Service" as defined in Section 65(19) of the Finance Act, 1994 and had provided 'support services of business or commerce' as defined in section 65(104c) of the Finance Act, 1994, which were taxable under the respective sub-sections of Section 65 of Finance Act, 1994. Regarding the valuation of taxable services, the provisions of Service Tax (Determination of Value) Rules, 2006 (Valuation Rules) were invoked by the department and all the expenditure or costs treated as consideration for the taxable service provided ....
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....aced reliance on following decisions: • United Telecom Ltd. Vs. CCE - 2011 (21) STR 234 (Tri. Bang,) • Seagull Freight Systems - 2012 (27) STR 530 (Comm, Appls) 2.3 He also submits that on other charges demand are confirmed under the category of BSS on the profit element of these activities which are not taxable under the category of BSS. A careful study of above stated activities reveals that recovering charges such as ocean freight or air freight or amount paid to shipping line or for customs clearing charges or fumigation or for insurance or palletization or statutory charges or transportation or documentation charges or administration charges is not an activity covered under in section 65 (104c) of the Finance Act, 1994 that defines 'support service of business or commerce'. Hence it is quite evident that no service tax is payable by the appellant on activities that are not taxable service in terms of provisions of Section 65(105) (zzzq) of the Finance Act, 1994 as presumed in the impugned order. The Ld. Commissioner found that the expression "service provided in relation to business or commerce" is all encompassing and includes every service provid....
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....viding such services and demand of service tax from the appellant is not sustainable when appellant have not provided these services and have only claimed reimbursement of such charges. Even if margin is added to recover incidental expenses, such reimbursements are not taxable in appellant's hands as the activity is taxable specifically under the category of Customs House Agent and not under BSS. Similarly amount paid to insurance company, amount paid to fumigation agency, amount paid to palletisation company, statutory dues, transportation charges, documentation to facilitate shipping company, administrative expenses all their services are not provided by the appellant but by other respective agencies and service providers and they also discharged the service tax wherever applicable. Appellant have not provided these services and have only claimed reimbursements of such charges. The onus to prove with sufficient evidence that the receipts were against the taxable services lies on the department which was not discharged at all by the department. 2.7 He also submits that the demand of service tax confirmed on reimbursable expenses recovered by the appellant is not legal as these ....
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....the value for the purpose of charging service tax for the said Services. The adjudicating authority, has not taken into cognizance the provisions of Rules 5(1) and 5(2) of the valuation Rules and without getting into the merits as to whether the service provider falls within the ambit of a 'pure agent' has given her findings. 4. Heard both sides, perused the records of the case and carefully considered the submissions made by both the sides. 4.1 We first deal with the appeal filed by the Revenue. We find that revenue in their appeal disputed the dropping of service tax demand on the ground that as per the provisions of Rule 5(1) of the valuation Rules, all expenditure or costs incurred by the service provider shall be treated as consideration for the taxable service provided and shall be included in the value for the purpose of charging service tax for the said services. Service provider has not acted as a 'pure agent for the service recipient within the meaning provided in Explanation 1 to Rule 5(2) of Valuation Rules. Service provider further not fulfilled the conditions detailed in Rule 5 (2) of the valuation Rules. It is beyond doubt that in order to exclude expenditures ....
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.... (v) production or processing of goods for, or on behalf of, the client; (vi) provision of service on behalf of the client; or (vii) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, but does not include any activity that amounts to manufacture of excisable goods." 4.4 The submission of Appellant is that it was necessary for the Department to specify the activity and the nature of service that was to be taxed and for this it was necessary for the Department to point out the specific clause out of above seven clauses mentioned in Section 65(19) of the Act but that was not mentioned in the show cause notice and impugned order. We find the force in this contention and observed that in the matter of Commissioner of Customs & Central Excise, Goa v. Swapnil Asnodkar [2018 (10) G..S.T.L. 479 (Tri. - Mumbai)], a Division Bench of the Tribuna....
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....esaid decisions we hold that it is imperative for the Department to specify which specific service contained in the seven clauses of Section 65(19) of the Act is being provided and in the absence of any specific service pointed out in show cause notice and order, the demand cannot be confirmed. 4.6 In this context the argument made by Learned CA for the Appellant deserves to be accepted. In the instant case Appellant was not promoting or marketing any kind of goods produced or provided by or belonging to the client ; appellant was not promoting any sort of services provided by any person; appellant was not providing any customer care services on behalf of the client; appellant was not procuring any sort of goods or services which are inputs for the client to attract the provisions of Section 65(19)(v); appellant are not either producer or processor on behalf of the client. Further appellant was not making any provision of services on behalf of the client in order to attract Section 65(19)(vi). Thus, in the absence of any services provided by the Appellant, Service Tax could not have been levied on the amount of incentive/profit share received by the Appellant. 4.7 We also fin....
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....s to the appellant. The said transactions of appellant do not fall under 'Support Service of Business or commerce'. 4.9 We also find that the demand confirmed by the Ld. Commissioner on difference between the amounts received from the client as reimbursable expenses and the amount spent/ incurred is not sustainable. Once the Ld. Commissioner hold that the reimbursable part of expenses is not taxable, then there is no legal basis to confirm the service tax on differential amount under 'Support Service of Business or Commerce'. Further, there is no evidences on records to establish that the said difference amount are pertaining to the service provided by the appellant. We also find that in the case of Bax Global India Ltd. v. Commissioner of Service Tax - 2008 (9) S.T.R. 412 to canvas the point that if any profit has been made in respect of other activity they cannot be subject to levy of service tax as per the decision of the Apex Court in Baroda Electric Meters Ltd. v. Commissioner of Central Excise - 1997 (94) E.L.T. 13 (S.C.). Therefore the service tax demand confirmed by the Ld. Commissioner on difference amount is not sustainable and we set aside the same. 4.10 We also fi....
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....eel Ltd has held that it is not taxable. Therefore, the issue involved herein is purely of interpretation of law about valuation and taxability of the service. It is also fact that the appellant have been submitting all the documents details to the department. In this fact no malafied intention can be alleged against the appellant. In the present case the demand for the period from October 2005 to 2009-10 was issued by show cause notice dated 21.04.2011, other two show cause notices were issued on 21.10.2011 and 22.12.2012 for the period 2010-11 and 2011-12 respectively. Our above view is supported by the following Judgments: * In the case of Adani Enterprise Ltd Vs. CST the Hon'ble Supreme Court has passed the following decision: "19. As regard the limitation issue argued by the Learned Counsel, we find that in the facts of the present that firstly the issue involved is of pure interpretation of legal provisions therefore, it cannot be said that the Appellant had any mala fide intentions and have suppressed any fact with intention to evade payment of service tax. It is also on record that the Appellant have represented the matter before Audit team and also before....