TaxTMI 
TaxTMI 
TaxTMI 
2025 (9) TMI 259
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....importers/exporters, the appellant incurred statutory and third-party expenses on behalf of their Principals, which were reimbursed strictly on actual basis without mark-up. 2.1. The Department issued the following Show Cause Notices to the appellant, which is the subject matter of the present appeal: - (i) SCN C. No. V(15)189/ST-Adjn/JC/12/23881-83 dated 10.10.2012, demanding Rs.19,90,219/- for FY 2007-08 to 2011-12, alleging non-inclusion of reimbursed expenses under Rule 5(1)/(2) of the Service Tax (Determination of Value) Rules, 2006 (ii) SCN C. No. (15)324/ST-Adjn/Commr/13/26867 dated 22.10.2013, proposing a further demand of Rs.3,93,15,175/- for the Financial Years 2008-09 to 2011-12. 2.2. The said Show Cause Notices were adjudicated vide a common order dated 30.06.2016, by the Ld. Commissioner of Service Tax-II, Kolkata, wherein a portion of the demand raised in the said Notices was confirmed by the ld. adjudicating authority, along with interest and penalties, while dropping the remaining portion of the demand. Aggrieved by the confirmation of Service Tax demands against them, along with interest and penalty, the appellant has filed this appeal. 2....
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....demand of service tax confirmed in the impugned order on this count. 4. Regarding the demand of service tax of Rs.60,61,591/- confirmed in the impugned order, the appellant submits that this demand has been raised on the basis of difference between ST-3 and Debtors' Summary - i.e., alleged short reporting of receipts vis-à-vis Debtors ledger. 4.1. In this regard, it is the appellant's contention that service tax cannot be levied merely on the basis of assumptions and presumptions; the levy requires identification of taxable service, identification of service recipient, and consideration received; that mismatch in the accounting or accounting differentials are not sufficient to demand service tax. It is pointed out by the appellant that in the present case, the Debtors contain non-taxable items such as Credit notes, exempt activities (e.g., agri handling), barge operations covered by exemption, State VAT, and pure-agent recoveries etc. The appellant also submitted a CA Certificate wherein the figures have been reconciled and found excess payment in two years and a minor shortfall in payment in one year, which they have already paid along with interest. The appellant als....
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....mand of service tax of Rs.1,59,49,183/- confirmed in the impugned order, along with interest and penalties thereon. 7. On the other hand, the Ld. Authorized Representative of the Revenue reiterated the findings in the impugned order. He submits that the appellant did not submit any documentary evidence to substantiate their claim that the same were reimbursable expenditure received on actual basis. Accordingly, the Ld. Authorized Representative of the Revenue contends that the claim of the appellant that they have acted as a pure agent in respect of such other expenses is unsubstantiated. In view of the above, The Ld. Authorized Representative of the Revenue supports the impugned order. 8. Heard both sides and perused the appeal records. 9. We observe that service tax demand totally amounting to Rs.1,59,49,183/- has been confirmed in the impugned order, under the following categories: - (1) Pure Agent Issue - involving service tax of Rs.58,96,594/- [Rs.58,78,821/- + Rs.17,773/-] on the alleged non-exclusion of reimbursable expenses. (2) Difference between ST-3 and Debtors' Summary - involving service tax of Rs.60,61,591/- on the alleged short reporting of....
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....ure agent'. We find that such reimbursable expenses collected by the appellant in the capacity of a 'pure agent' are not includable in the assessable value as provided under Section 67 of the Finance Act, 1994, prior to 14th May, 2015, as has been held by the Hon'ble Apex Court in the case of Union of India v. Intercontinental Consultants and Technocrats Pvt. Ltd. [2018 (10) G.S.T.L. 401 (S.C.)]. The relevant observations of the Hon'ble Apex Court in the aforesaid judgement are reproduced below: - "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 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 ....
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....legislative drafting and latter one is to be found in the various principles of "interpretation of statutes". Vis-a-vis ordinary prose, a legislation differs in its provenance, layout and features as also in the implication as to its meaning that arise by presumptions as to the intent of the maker thereof. 28. Of the various rules guiding how a legislation has to be interpreted, one established rule is that unless a contrary intention appears, a legislation is presumed not to be intended to have a retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. If we do something today, we do it keeping in view the law of today and in force and not tomorrow's backward adjustment of it. Our belief in the nature of the law is founded on the bedrock that every human being is entitled to arrange his affairs by relying on the 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 ....
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....r and charged, in the course of providing or agreeing to provide a taxable service"; however, the Hon'ble Apex Court has decisively held that such an amendment being substantive in nature, introducing a new charging element, cannot be applied retrospectively. Thus, we observe that by virtue of the above ruling, for all periods prior to 14.05.2015, reimbursable expenses remain outside the purview of taxable value under Section 67. Accordingly, we hold that the said charges reimbursed by them are not includable in the assessable value for the purpose of computation of their Service Tax liability. 9.4. The above view has also been followed by this Tribunal in the case of M/s. Chatterjee & Sons Pvt. Ltd. v. Commissioner of Service Tax, Kolkata [2024 (6) TMI 500 - CESTAT, Kolkata. 9.5. This Tribunal again had an occasion to analyse an identical issue, in the case of M/s. Sea Wings Logistics Pvt. Ltd. v. Commissioner of Service Tax-II, Kolkata [2024 (10) TMI 51 - CESTAT, Kolkata],wherein it has been observed as under: - "8. We find that the said issue has been settled by the Hon'ble Apex Court in the case of Intercontinental Consultants and Technocrats Pvt. Ltd. (supra) wh....
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....rifying the records of the appellant and reconciled the figures. As there is no contrary evidence against the above said observations in the Chartered Accountant's certificate, we do not find any reason to reject the same. 10.1. Further, it is pertinent to mention that Courts and Tribunals have consistently quashed demands confirmed solely on the basis of Profit and Loss Account, Ledger and ST-3 comparisons without correlation to taxable services. 10.2. In the case of Forum Projects Pvt. Ltd. [2025 (1) TMI 1262], this Tribunal has observed as under: "10. Regarding the demand of service tax of Rs.88,051/-, we observe that these demands have been raised on the differential value of Profit & Loss Account and ST-3 returns. The appellant submitted that the Profit & Loss Account is prepared on accrual basis whereas Service Tax is payable on receipt basis and thus, there is a difference between the values declared in the ST-3 and Profit and Loss Account. We observe that the ld. adjudicating authority has not given any finding regarding the liability of service tax on the differential value. It is the settled position of law that demand of Service Tax cannot be conf....
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....inable and hence, we set aside the same. 11. Regarding the demand of service tax of Rs. 39,90,998/- confirmed in the impugned order, we observe that this demand has been raised and confirmed on the basis of difference observed between ST-3 and Bank Credits. In this regard, we find that the aggregate bank inflows include various non-taxable receipts such as, Fixed Deposit maturities, tax refunds, contra/intra-bank, reversals, capital receipts, dividends, insurance claims, loans, non-service receipts, etc. We are of the view that there is no service tax liability on any of these receipts. 11.1. We also find that the appellant has submitted a full reconciliation along with CA Certificate, which explains each credit across 14 accounts certified by a professional Chartered Accountant. It is observed that the Chartered Accountant is a professional, who has issued the Certificate after verifying the records of the appellant and reconciled the figures. As there is no contrary evidence against the above said observations in the Chartered Accountant's certificate, we do not find any reason to reject the same. 11.2. Furthermore, it is well settled that demands cannot be raised on....