Case Law Details
RELEVANT PARAGRAPH
We have considered the submissions made at length by both sides and perused the records. The issue for determination in this case is whether the reimbursable expenditure incurred by the appellant is chargeable to service tax or not.
On perusal of the returns it appears that they had indicated this amount against the column marked as “amount billed for exempted services other than export”. It is also undisputed that the appellant has been taking this stand before the lower authorities that the amounts are reimbursable expenses. It was the claim of the appellant that they had received reimbursement charges during the course of rendering taxable services under the consulting engineer services. As such the said expenses are liable to be deducted from the gross value of the taxable service.
7. We find that the decisions of this bench in the case of Scott Wilson Kirkpatrick (I) Pvt Ltd., (supra) clearly lays down as under:
“We are convinced that the appellants had not only rendered ‘Consultancy Engineering Services’ but also various other services which have already been enumerated. For Example, by no stretch of imagination, socio economic study would be termed as consulting engineering Service. Therefore demanding tax on the gross receipts is not correct. The Chartered Accountant has certified that the appellants have received a sum of Rs 17,42,05,551/ – in local currency for the various services rendered. Further, the amount received in foreign exchange amounts to $ 16,15,662/-, The DGST vide their clarification of October 2003 has stated that the reimbursable/ out of pocket expenses charges is not subject to service tax and based on document, the same can be excluded by the assessing officer. From the documentary evidence produced, it is seen that the entire amount receipts cannot be subject to service tax as part of the amount is on account of reimbursable expenses. The lower authorities have not followed the DGST Circular. According to the Notification Nos 21/2003-ST dated 20-11-2003 and 6/99-ST dated 9-4-99, the taxable services for which payment is received in India is convertible foreign exchange is exempted from the whole of service tax under section 66 of the Act. We find that the commissioner (Appeals) has not properly examined the implication of the above notifications. In our view the demand of differential tax is sustainable both on merits and limitation. We also find that the lower authority has blindly imposed savage penalties as pointed out by the appellants. The appellate authority has also closed his eyes to this purposes. However, while imposing penalty one should exercise proper judgment. Otherwise such careless exercise of statutory powers would amount to mockery of judicial delivery system. In view of our above findings, we set aside the impugned order and allow the appeal with consequential relief.” This above reproduced ratio is followed by this bench of the Tribunal in the following cases:
1) Jayalakshmi Enterprises (2008 (?) STR 19 Tri-Bang)
2) Bax global India Ltd., (2008 (9) STR 412 Tri-Bang)
3) GAC Shipping (India_ Pvt. Ltd., (2008 (9) STR 524 Tri.-Bang)
4) International shippers & Traders (2008 (10) STR 47 Tri-Bang)
It is also seen that the ratio is followed by the coordinate benches of this Tribunal in the following cases:
1) Sudharson Security Bureau (2008 (10) STR 304 Tri-Chennai)
2) Reliance Industries Limited (2009 (12) STR 345 Tri-Ahmd)
3) Malabar Management Services (2008 (9) STR 483 Ti-Che)
We find that the issue in the case of Scott Wilson Kirkpatrick (I) Pvt Ltd., (supra) is regarding the consulting engineer services only.
8. Accordingly since the issue is now squarely covered in favour of the appellant as regards the non-includibility of the reimbursable expenses in the value of the services provided, we find that the impugned order of the learned Commissioner (appeals) is not correct and legal. In view of this, the impugned order is set aside and the appeal allowed with consequential relief if any.
