Commissioner of Central Tax Vs Hindustan Shipyard Ltd (CESTAT Hyderabad)
The Department filed an appeal before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Hyderabad against the Order-in-Original dated 01.05.2015 passed by the Commissioner in favour of the respondent. The dispute concerned whether expenses incurred by the respondent for travel, accommodation, and related facilities provided to specialists of a foreign service provider should be included in the taxable value of consulting engineering services received under the reverse charge mechanism.
The respondent had entered into a contract dated 06.10.2005 with M/s Rosoboron Export, Moscow for modernization of the Indian Navy yard at its premises in Visakhapatnam. As per the contract, specialists from the foreign supplier were to be deputed to India to perform repair works. The respondent was contractually required to bear expenses such as air travel to and from Visakhapatnam, accommodation, and related facilities for these specialists.
The respondent paid Service Tax under the reverse charge mechanism on the consulting engineering services provided by the foreign company. However, it did not include the expenses incurred for air travel and accommodation of the foreign specialists in the taxable value. A Show Cause Notice dated 17.04.2014 was issued alleging that such expenses should have been included in the taxable value.
