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Valuation — Whether amount incurred by a service provider as reimbursements is to be included in the assessable value — Conflicting views of the Tribunal — Matter referred to Larger Bench to settle the issue.
Facts:
The appellant, a ‘Clearing and Forwarding Agent’, during the period 2003-04 to 2005-06 did not charge service tax on the reimbursable receipts, such as transportation charges, loading and unloading charges, rent, salary to staff, electricity, courier charges, stationery charges, etc. According to the adjudicating authority, such charges were liable for service tax and were includible in the gross amount of value of service. The appellant submitted a series of Tribunal decisions wherein it was held that the gross value for the discharge of service tax liability would not include reimbursement charges. The Revenue relied upon a contrary decision in the case of M/s. Naresh Kumar & Co. Pvt. Ltd. v. Commissioner of Service Tax, Kolkata, (2008) 11 STR 578 (Tri.).
Held:
It was previously held in various cases that service tax is restricted to amounts received by the assessee for carrying C&F only and other charges such as loading, unloading should be excluded. Similarly, it was also proposed that transportation expense collected by such an agent was not liable to tax along with the actual expenses such as labour, freight, telephone, electricity reimbursed by the principal. However, in the case referred by the Revenue (cited above), it was concluded that those expenses which are indispensable and inevitable for providing such services and which would essentially make value addition to the services be liable to service tax. Since there were two different stands taken by the Co-ordinate Benches, it was decided to refer the matter to the Larger Bench.
