TaxTMI 
TaxTMI 
TaxTMI 
2025 (2) TMI 628
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....use Agent service (CHA service in short). During the course of audit conducted by the Internal Audit Party it was noticed that the Appellant apart from collecting service charges for providing CHA service, also collected charges such as EDI charges, IAAI charges, DLO charges, and transport charges from the clients. However, the appellant has not included the aforementioned charges collected in the gross taxable value for the purpose of payment of service tax and did not pay service tax on the same claiming the said charges to be reimbursable expenditure and not eligible to service tax. 3. The Department was of the view that as per section 67(1) of the Act, where the provision of service is for a consideration in money, the taxable value of service is the gross amount charged by the service provider for providing service and according to Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006 (Valuation Rules in short), expenditure or cost incurred by the service provider in the course of providing taxable service shall be treated as consideration for the taxable service and is includible in the taxable value. Again, Rule 5(2) of the Valuation Rules provided t....
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....l the appellant preferred an appeal before the Commissioner of Service Tax(Appeals-I), who however, vide the impugned OIA 105/2015 (STA-I) dated 20.04.2015, upheld the impugned OIO of the adjudicating authority. The appellant has preferred the present appeal assailing the impugned OIA and is thus before this Tribunal. 5. The learned counsel, Ms. Radhika Chandrasekhar appeared and argued for the appellant. The learned counsel submitted that the appellant is in the business of providing service as a CHA and has discharged service tax on the consideration received for providing CHA services. It is submitted that duriing the course of providing CHA services the appellant has incurred expenses such as EDI charges, IAAI charges, DLO charges, transport charges, transport charges on behalf of the client. These expenses are reimbursed by the client on actuals. The appellant did not discharge service tax on the reimbursable expenses as it is not a consideration for any services rendered. The learned counsel submits that only the service charges received as consideration for the services provided or to be provided would form part of the taxable value for the purposes of service t....
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.... 2013 (29) STR 9 (Del), wherein Rule 5(1) of the Service Tax Valuation Rules, 2006 which provided for inclusion of expenditures or costs incurred by the service provider in the course of providing taxable services, in the value of such taxable services, was stuck down as ultra vires Section 66 and Section 67 of the Act and as travelling beyond the scope of the said sections. The Honourable Supreme Court had also noticed the nature of reimbursable expenses that arose for consideration in the facts of the case as well as that in connected appeals before it, and has gone on to hold as under: "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 subordinate legislation to be enacted in the said manner, as done by Rule 5. As noted above, prior to April 19, 2006, i.e., in the absence of any such Rule, the valuation was to be done as per the prov....
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....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 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 has 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 principle that Rules are framed for achieving the purpose behind the provisions of the Act, as held in Taj Mahal Hotel : "the Rules were meant only for the purpose of carrying out the provisions of the Act and they could not take away what was conferred by the Act or whittle down its effect." 29. In the present case, ....