Rane Holdings Limited Vs Commissioner of GST and Central Excise (CESTAT Chennai)
CESTAT Chennai held that expense of air travel of service provider who provided Management Consultancy Service is not includible in value for discharge service tax under reverse charge mechanism [RCM]. Accordingly, appeal allowed and demand set aside.
Facts- The Appellant has taken the Service Tax Registration for payment of service tax in respect of various services including ‘Management Consultancy Services’. During the disputed period, the Appellant and few other companies for procuring the consultancy service from Prof. Y. Washio, a Japanese National (Service Provider). The Appellant appears to be duly discharging their service tax liability on the said services under Reverse Charge Mechanism u/s. 66A of the Finance Act, 1944.
The Appellant booked air tickets for the service provider’s travel from Japan to India and paid these travel fares to the travel agents on behalf of all the service recipients. The Appellant raised debit notes on other service recipients to claim the share of air fare which pertains to the said recipients as reimbursement.
Whereas consequent to the audit of the Appellant, it was alleged that the cost of air travel expenses borne by the Appellant would be a consideration in the hands of the service provider so, the Appellant is liable to pay service tax on the said air travel expenses under Rule 5(1) of the Service Tax (Determination of value) Rules, 2006. Consequently, two Show Cause Notices were issued.
