AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 266
X X X X Extracts X X X X
X X X X Extracts X X X X
....included certain incomes relating to service charges receipts, drawback commission, exchange rate fluctuation income and brokerage in the value of their taxable service; an investigation was initiated and statements of different persons were recorded. On conclusion of the investigation, a Show Cause Notice dated 16.10.2012 was issued to the appellants demanding service tax of Rs.96,62,307/- along with interest and penalties. The Show Cause Notice was adjudicated by the learned Commissioner confirming the service tax of Rs.83,70,488/- under the head 'Clearing and Forwarding Agency Service', 'Business Auxiliary Service', 'Goods Transport Agency Service'; dropping service tax demand of Rs.12,91,819/- on account of Commission and Rebate. Hence ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ervices. With respect to demand on brokerage, learned counsel for the appellant submits that this is an incentive given by the shipping lines for the packing of cargo with their respective shipping lines. This is in fact a reduction of freight charges payable to the shipping lines by the appellants on behalf of their clients. It cannot be considered as a Business Auxiliary Service provided by the appellant. 2.2 In respect of demand raised under GTA service, learned counsel submits that the appellant as part of their clearing and forwarding operations also arranged to transport the goods from the customers' place to the port and vice versa and paid freight to the transporter; they claimed the reimbursements of such freight paid from the cus....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2010-11 that the service provider shown the income and expense of the above heads under the Heads of "Operating Income" and "Operating Expenses respectively. In view of the difference between amount paid and amount received, the element of Profit or Loss is having direct impact in their financial accounts. And hence the amount received under the head of 'Port Payments/Freight Payments and "Reimbursement of Transport & Weighment Charges have to be treated as "Income" of the I service provider consequently these charges are falling under the definition of "Gross Amount as defined under Section 67(4)(c) of Chapter V of Finance Act, 1994, Also the service provider has not fumished the documents evidencing the payment of Ocean Freight or Tr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....charged commission for such services which were escaped assessment. Further, they have not produced any evidence in support of their claim that the drawback commission received is equal to the drawback amount paid to their customers if it is the case, the Chartered Accountant in his certificate would have stated the disbursement of drawback commission amount to their customers, but this aspect is silent in the certificate. Hence, I conclude that this drawback commission is an income earned for their service and escaped assessment and hence the service tax payable by the assessee and the same is recoverable. And with regard to rebate received, I find that the rebate amount received is not taxable as per the Board's instruction vide F.No.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orwarding agent's service 6847319 136946 68473 7052738 Business Auxiliary Service 585006 11700 5851 602557 Goods Transport Agent's Services 694363 13887 6943 715193 8126688 162533 81267 8370488 6. However, we find that the above conditions of the impugned order is in view of Rule 5 of the Service Tax (Determination of Value) Rules, 2000. We find that the Hon'ble Supreme Court has struck down the said Rule in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. (supra). The Hon'ble Court has held 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 se....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... providing 'such' taxable services. As a fortiori, any other amount which is calculated not for providing such taxable service cannot a part of that valuation as that amount is not calculated for providing such 'taxable service'. That according to us is the plain meaning which is to be attached to Section 67 (unamended, i.e., prior to May 1, 2006) or after its amendment, with effect from, May 1, 2006. Once this interpretation is to be given to Section 67, it hardly needs to be emphasised that Rule 5 of the Rules went much beyond the mandate of Section 67. We, therefore, find that High Court was right in interpreting Sections 66 and 67 to say that in the valuation of taxable service, the value of taxable service shall be the gross amount cha....