TaxTMI 
TaxTMI 
2026 (2) TMI 336
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....ce provider's specialists are to be deputed to respondent's premises in India for carrying out repair works for which the respondent was to bear the expense towards air travel transportation to & back from Visakhapatnam, accommodation etc. The respondents were paying the Service Tax on "Consulting Engineering Service" on the amount paid to the above foreign company, under reverse charge mechanism. However, the respondent's have not included the expenditure incurred by them towards providing air travel and accommodation etc., to the supplier's specialists in the taxable amount. Therefore, the respondent were issued a Show Cause Notice vide C.No. V/15/82/2014-Adj dated 17.04.2014. The respondent submitted their reply in response of Show Cause Notice. 3. The Learned Commissioner after due process, vide the Order-in-Original has dropped the proceedings initiated against respondent on ground that the impugned expenses incurred by the respondent had already suffered Service Tax as the service providers in India charged Service Tax leviable on the services of Hotel accommodation and Air travel and levy of Service Tax on such expenses again would lead to double taxation on said expenses....
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....nce, Learned Commissioner has erred in concluding that the said expenses suffered Service Tax. 7. Learned AR also submits that as per Section 67(1)(ii) of the Finance Act, 1994, where Service Tax is chargeable on any taxable service with reference to its value, then such value shall, in a case where the provision of service is for a consideration not wholly or partly consisting of money, be such amount in money as, with the addition of Service Tax charged, is equivalent to the consideration. Learned AR in this regard relied on M/s Bhayana Builders (P) Ltd., [2013 (32) S.T.R. 49 (Tri-LB)], wherein, held that consideration means a reasonable equivalent for other valuable benefit passed on by the promisor to the promise or by the transfer of to the transferee. 8. Learned AR also submits that the services/ facilities such as transportation / conveyance and Hotel accommodation that are to be provided in India to the foreign services provider's specialists by the respondent at their expense are explicitly mentioned in the contract between the respondent and the service provider. Therefore, the many value of said services / facilities forms part of the total value of impugned servic....
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.... medical aid, work wear for use in Shipyard. Respondent had contractual obligation to incur these expenses, without any right to claim reimbursement from Russian vendor. Such expenses were incurred by respondent directly by making payment to various service providers. There is no dispute over the fact that such expenses were not charged to Russian vendor. The such amount incurred in Indian Rupees by the respondent are not part of Gross Consideration for purpose of Section 67 of the Finance Act, because, the same is not charged by way of any Invoice raise by the Russian vendor on the respondent. The respondent had paid Service Tax on the invoices raised by Russian vendor for technical fees towards consultancy services provided. 11. Learned Counsel for the respondent relied on CESTAT Bengaluru decision in the case of M/s Toyota Kirloskar Auto Parts Pvt Ltd., Vs Commissioner of Central Excise (Appeals)(LTU) Bangalore [2024(6) TMI 1469] wherein it was held that the amount incurred in India pursuant to a contract for facilitating the visit of the foreign trainers are not to be added to the technical fees charged by the Foreign firm for deputing the trainers to India. Learned Counsel ....
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.... towards the provision of 'such service' has defined in Section 67 of the Finance Act, 1994. The relevant para of the decision as follows: "13. We find that on appeal, the demand of Service Tax prior to the period 18.04.2006 i.e., prior to the insertion of Section 66A in the Finance Act, 1994 has been dropped by the Commissioner (Appeals), and has confirmed the demand for the period 18.04.2006 to 31.03.2008. We find that the issue is no longer res integra in view of the decision in Inter Continental Consultants and Technocrats Pvt Ltd., wherein the Hon'ble Supreme Court has upheld the order of Hon'ble Delhi High Court, wherein it is held that: "18. Section 66 levies Service Tax at a particular rate on the value of taxable services. Section 67(1) makes the provisions of the section subject to the provisions of Chapter V, which includes Section 66. This is a clear mandate that the value of taxable services for charging Service Tax has to be in consonance with Section 66 which levies a tax only on the taxable service and nothing else. There is thus inbuilt mechanism to ensure that only the taxable service shall be evaluated under the provisions of 67. Clause (1) of s....
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....tial duty on account of the amounts incurred by the appellant towards travel, conveyance and stay of the foreign trainers, who have come to India to train the personnel of the appellant in India. The appellant is liable to pay Service Tax under reverse charge mechanism (RCM) as per the provisions of Rule 2(1)(d)(iv) of Service Tax Rules, 1994. We find that the appellant has not received any reimbursement towards the travel, conveyance and stay provided by them to the foreign trainers from M/s TMC, Japan. The department has included the expenditure incurred for the foreign trainers in the assessable value. The appellant contended that the expenditure incurred by them towards the travel, conveyance and stay provided by them to the foreign trainers is not towards the services received from M/s TMC, Japan and for 'such service' received from M/s TMC, Japan, the appellant has discharged the Service Tax liability under reverse charge mechanism (RCM). We find that the department has invoked the provisions of Rule 5 of Service Tax (Determination of Value) Rules, 2006. The Hon'ble Supreme Court in the case of Union of India Vs. Intercontinental Consultants and Technocrats Pvt Ltd., [2018 (1....
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....sfy the following ingredients: "Service Tax is payable on the gross amount charged the words "gross amount only refers to the entire contract value between the service provider and the service recipient. The word "gross" is only meant to indicate that it is the total amount charged without deduction of any expenses. Merely by use of the word "gross" the Department does not get any jurisdiction to go beyond the contract value to arrive at the value of taxable services. Further, by the use of the word "charged", it is clear that the same refers to the amount billed by the service provider to the service. Therefore, in terms of Section 67, unless an amount is charged by the service provider to the service recipient. It does not enter into the equation for determining the value on which Service Tax is payable. The amount charged should be for "for such service provided" Section 67 clearly indicates that the gross amount charged by the service provider has to be for the service provided. Therefore, it is not any amount charged which can become the basis of value on which Service Tax becomes payable but the amount charged had to be necessarily a consideration for the se....