2026 (8) TMI 522

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....of the case are that the Appellant M/s Novus Solutions, Proprietor: Shri Praveen Kumar, is registered with the Service Tax Department and is providing services of "Clearing & Forwarding Agent" as a Pure Agent as covered under Rule 5(2) of Service Tax (Determination of Value) Rules, 2006. After brief communication, a Demand cum Show Cause Notice [SCN] was issued for the period from 2013-14 (October-March) to 2017-18 (upto June) proposing to demand Service Tax amounting to Rs.17,01,818/- alongwith applicable interest and for imposition of penalty as per the chart given below:- 3. Reply dated 06.11.2019 was submitted. The Adjudicating Authority observed that the claim of the Appellant assessee regarding the Service Tax liability on GTA Serv....

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....5 to May'2015 which attracts service tax @12.36% only. Similarly, the appellant has received taxable amount of Rs.73,63,375/- during the period June'2015 to 14th Nov'2015 & Rs.68,85,678/- during the period 15th Nov'2015 to March'2016 which attracts service tax rate 14% & 14.5% respectively. Thus, the appellant is liable to pay service tax amounting to Rs.23,46,885/- only instead of Rs.23,86,382/- as determined by the adjudicating authority. Therefore, the service tax liability during the F.Y. 2015-16 on the appellant is reduced by an amount of Rs.39,497/- 5. In view of the above, I modify the impugned order dated 14.01.2020, as under: (i) Confirmation of the demand of Service Tax (including Cesses) is reduced to Rs.87,728/....

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.... shall be excluded from the value of the taxable service if all the following conditions are satisfied, namely :- (i) the service provider acts as a pure agent of the recipient of service when he makes payment to third party for the goods or services procured; (ii) the recipient of service receives and uses the goods or services so procured by the service provider in his capacity as pure agent of the recipient of service; (iii) the recipient of service is liable to make payment to the third party; (iv) the recipient of service authorises the service provider to make payment on his behalf; (v) the recipient of service knows that the goods and services for which payment has been made by the service....

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.... that since the expenses incurred by the Appellant assessee as pure agent of M/s Prism Cement Ltd.,/Prism Johnson Ltd. for the Financial Year 2014-15, have been reimbursed by the service receiver and the service provider has recorded and adjusted the amount in his Books of Accounts (such amount has been paid by him to the third party). This transaction is squarely covered by the provision of Rule 5 (2) as reproduced above. 10. In view of the above discussions, the demand of Rs.87,728/- cannot be sustained and is accordingly set aside. Since the demand itself has been set aside there would not be any liability of interest and the penalty imposed under Section 78 is also set aside. The appeal filed by the Appellant is allowed with conseque....