TaxTMI 
TaxTMI 
2026 (5) TMI 976
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....rder charges/Air freight charges, EDI charges, survey charges, warehousing charges, steamer agent charges, container freight station charges and terminal handling charges. The Appellant had not paid service tax on these charges claiming these to be reimbursable expenditure not leviable to service tax. The Department citing Rule 5(1) of the Valuation Rules to contend that expenditure or cost incurred by service provider in the course of providing taxable service is includible in the taxable value and contending that the Appellant had not fulfilled the conditions specified in Rule 5(2) ibid to claim exclusion of the above expenditure as a 'Pure Agent' issued a Show Cause Notice dated 28.09.2009 in respect of the reimbursable expenditure recovered from the Appellant's clients for the period from 19.04.2006 to 31.03.2009, invoking the extended period of limitation and demanding service tax along with applicable interest and proposing imposition of penalties under Section 76 and 78 of the Finance Act, 1994. After due process of law, the Adjudicator vide Order in Original No.52/2012 dated 15.05.2012 dropped service tax with respect to the reimbursable expenses that he f....
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....30 Centax 383 (Tri-Mad), Balram Shipping Services v Commissioner of GST and Central Excise, vide Final Order No.41233041234/2025 dated 03.11.2025 and M/s. Seher v. CST, Delhi-II, Final Order No.50509/2022 dated 13.06.2022. It is therefore prayed that the impugned order be set aside and the Appeal allowed. 4. Mr. N. Satyanarayana, Learned Authorised Representative, appearing on behalf of the Respondent, reiterated the findings of the Appellate Authority in the impugned Order. 5. We have heard both sides, perused the appeal records and the case laws cited by the appellants. 6. We find that the SCN has been issued placing reliance on Rule 5(1) and Rule 5(2) of the Service Tax (Determination of Value) Rules,2006. We find that the issue is no more res-integra in view of the decision of the Honourable Supreme Court in the case of UOI v Intercontinental Consultants and Technocrats Pvt Ltd, 2018 (10) GSTL 401 (SC) which has considered the issue of liability to pay service tax on reimbursable expenses received by the service provider in the course of rendering services for the client, apart from the consideration received for rendering the services on which the client h....
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....s 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 be 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 charged by the service provider 'for such service' and the valuation of taxable 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. Sub-section (4) of Section 67 empowers the rule making a....
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....t 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] wherein it was observed as under : "27. A legislation, be it a statutory Act or a statutory rule or a statutory notification, may physically consists of words printed on papers. However, conceptually it is a great deal more than an ordinary prose. There is a special peculiarity in the mode of verbal communication by a legislation. A legislation is not just a series of statements, such as one finds in a work of fiction/non-fiction or even in a judgment of a court of law. There is a technique required to draft a legislation as well as to understand a legislation. Former technique is known as 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....