TaxTMI 
TaxTMI 
2025 (12) TMI 519
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....peals-I). 2. Brief facts are that the appellant is registered as a service provider of Custom House Agent (CHA) Service. During the course of audit, the Department noticed that the appellant has collected reimbursable charged such as insurance charges, bond/godown rent, fumigation charges, survey charges, miscellaneous charges, etc. from the their clients during the period from 2004-2005 to 2008-2009. The Department was of the opinion that the said charges collected from the clients are to be treated as expenditure or cost incurred by them in the course of providing taxable service and as per Rule 5(1) of the Service Tax (Determination of Value of Service) Rules, 2006, such expenditure or costs shall be treated as consideration for the t....
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....e Ld. Authorized Representative appearing on behalf of the Respondent reiterated the findings in the impugned Order-in-Appeal No. 68/2016(STA-I) dated 20.01.2016. 6. Heard both sides, perused the appeal records and the decisions submitted. 7. We find that the issue of levy of service tax on reimbursable expenses invoking Rule 5(1) of the Service Tax (Determination of Value of Service) Rules, 2006 for the period up to 14.05.2015, is no more res integra and has come up for consideration by this very Bench recently in the case of A.S. Cargo Movers (P) Ltd. Vs. Commissioner of GST and Central Excise [F.O.No. 41333/2025 dated 14.11.2025]. The relevant portion is reproduced as under:- "10. We find that the issue on levy of service ....
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...., 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 provisions of Section 67 of the Act. 22. Section 66 of the Act is the charging Section which reads as under: "there shall be levy of tax (hereinafter referred to as the service tax) @ 12% of the value of taxable services referred to in sub-clauses of Section 65 and collected in such manner as may be prescribed." 23. Obviously, this Section refers to service tax, i.e., in res....
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....e' 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. 25. This position did not change even in the amended Section 67 which was inserted on May 1, 2006. Subsection (4) of Section 67 empowers the rule making authority to lay down the manner in which value of taxable service is to be determined. However, Section 67(4) is expressly made subject to the provisions of sub-section (1). Mandate of sub-section (1) of Section 67 is manifest, 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 ....
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.... 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 service tax. Though, it was not argued by the Learned Counsel for the Department that Section 67 is a declaratory provision, nor could it be argued so, as we find that this is a substantive change brought about with the amendment to Section 67 and, therefore, has to be prospective in nature. On this aspect of the matter, we may usefully refer to the Constitution Bench judgment in the case of Commissioner of Income Tax (Central)-I, New Delhi v. Vatika Township Private Limited [(2015) 1 SCC 1] wher....
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.... 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 is contrary to the general principle that legislation by which the conduct of mankind is to be regulated 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'Off....