TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 1036
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....s. In the course of discharging its role as Steamer Agent, the appellant is required to incur numerous statutory and third-party expenses on behalf of the vessel owners or their principals, such as pilotage, berth hire, Indian Coast Light dues, transporters'/stevedores charges, port dues, wharfage, launch hire, survey charges, and similar disbursements. These expenses are reimbursed to the appellant by the Principals strictly on actual basis. 2.1. As a trade practice, the appellant receives advances from the Principals towards meeting estimated expenditure for the vessels' operations, in addition to the agency service charges for which service tax has always been duly discharged. Upon completion of each voyage, the accounts are reconciled, and actual disbursement accounts are rendered to the Principals. Wherever the advance exceeds the actual expenditure, the balance is refunded to the Principals, or, in a few cases, written back and recorded as income in the Profit & Loss Account as per the standard accounting procedure advised by auditors. The amounts in question are merely residual balances, not linked to any taxable services. 3. A Show Cause Notice vide C. No. V(1....
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....ognizing the legislative gap in the valuation of taxable services vis-à-vis reimbursable expenses, the Parliament enacted a substantive amendment to Section 67 vide Finance Act, 2015, effective from 14.05.2015, wherein the definition of "consideration" was explicitly expanded to include "any reimbursable expenditure or cost incurred by the service provider 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, it is his submission 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, it is the appellant's contention that the said charges reimbursed by them are not includable in the assessable value for the purpose of computation of their Service Tax liability. 5.2. In this context, the appellant placed their reliance on the following decisions wherein the above ratio has consistently been followed by this Tribunal: i. M/s. Chatterjee & Sons Pvt....
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....in Rs. Rate of Tax Service Tax (including cess) payable (in Rs.) Service Tax (including cess) paid (in Rs.) Service Tax(including cess) to be paid (in Rs.) 1 2 3 4 5 6 7 8 01.10.10 to 31.03.11 43978862 31838181 12140681 10.30% 1133717 443091 690626 01.04,11 to 31.03.12 80048477 31655259 48393218 10.30% 4519040 292566 4226474 01.04.12 to 31.03.13 94558403 55310227 39248176 12.36% 4317439 762149 3555290 01.04.13 to 31.03.14 49694369 48797951 896418 12.36% 98609 416099 0 01.04.14 to 31.03.15 211094182 94147873 116946309 12.36% 12864510 746747 12117763 Total 479374293 261749491 217624802 20590153 8.1. It is the appellant's contention that there were so many other charges, namely: - (a) Stevedoring charges (b) Railway freight (c) Supply of fender (d) Supply of spare parts (e) Survey charges (f) Launch hire charges (g) Misc expenses which were also reimbursed by the appellant to the principals strictly on actual basis....
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....s 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 charged by the service provider 'for such service' and the valuation of tax service cannot be anything more or less than the consideration paid as quid pro qua for rendering such a service. .... 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 s....
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....lated when introduced for the first time to deal with future acts ought not to change the character of past transactions carried on upon the faith of the then existing law. 29. The obvious basis of the principle against retrospectivity is the principle of "fairness", which must be the basis of every legal rule as was observed in L'Office Cherifien des Phosphates v. Yamashita-Shinnihon Steamship Co. Ltd. Thus, legislations which modified accrued rights or which impose obligations or impose new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect; unless the legislation is for purpose of supplying an obvious omission in a former legislation or to explain a former legislation. We need not note the cornucopia of case law available on the subject because aforesaid legal position clearly emerges from the various decisions and this legal position was conceded by the counsel for the parties. In any case, we shall refer to few judgments containing this dicta, a little later." 30. As a result, we do not find any merit in any of those appeals which are accordingly dismiss....
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....lue of services rendered by an assessee. In this case, we find that whole of the period is prior to 14.05.2015. Accordingly, we hold that the reimbursable expenses received by the appellant from their clients are not includable in the taxable value of the services provided by them. Therefore, the demand of Rs.98,62,631/- is set aside." 8.7. In this regard, we also find it relevant to refer to the decision of the Hon'ble Madras High Court in the case of M/s. Trinity's Clearing and Shipping Agencies v. Union of India & ors. [2022 (5) TMI 12 - Madras High Court], wherein, while referring to the decision in Intercontinental Consultants and Technocrats Pvt. Ltd. (supra), the Hon'ble High Court has reinforced the settled legal position that Rule 5 of the Service Tax (Determination of Value) Rules, 2006 is ultra vires Section 67 of the Finance Act, 1994. 8.8. A similar view has again been expressed by the Hon'ble Madras High Court in the case of M/s. Brokeman Logistics India Pvt. Ltd. v. Commissioner of C.G.S.T. & C.Ex., Chennai [2024 (12) TMI 1182 - Madras High Court]. 9. In view of the above discussions and by relying on the ratio of the judicial precedents cited supra, we hold....
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....3 601,358 01.04.2013 to 31.03.2014 1.156,372 01.04.2014 to 31.03.2015 3,374,440 7,745,678 (D) Amount paid to Ports on behalf of clients, where Service Tax claimed by them and paid by Pharos Shipping & Overseas Services Pvt Ltd: 01 10.2010 to 31.03.2011 30,268,396 01.04.2011 to 31.03.2012 30,611,536 01.04.2012 to 31.03.2013 54.708,869 01.04.2013 to 31.03.2014 47,641,579 01.04.2014 to 31.03.2015 90,773,433 254,003,813 (E) Amount paid to Stevedores/Cargo Handlers on behalf of clients where Service Tax claimed by them and paid by Pharos Shipping & Overseas Services Pvt Ltd: 01.10.2010 to 31.03.2011 14,212,056 01.04.2011 to 31:03.2012 4,678,678 01.04.2012 to 31.03.2013 19.206,346 01.04.2013 to 31.03.2014 12,099,543 01.04.2014 to 31.03.2015 102,944,069 153,140,692 (F) Other amount paid to vendors on behalf of clients for those who have not charged Service Tax: Reimbursement claimed by Pharos Shipping & Overseas Services Pvt Ltd on actual basis only 01.10.2010 to 31.03.2011 254,422 01.04.2011 to 31.03.2012 287,854 01.04.2012 to 31.03.2013 506,736 01.04.2013 to 31.03.2014 667,616 01.04.2014 to 31.03.2015 1,233,054 2,949,682 (G) ....