Service Tax
TRT-2025-
Cestat Hyderabad
Date:-01-12-23
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 01 December 2023
Parties: R & A Associates Vs Commissioner of Central Tax, Secunderabad - GST
Facts –
- The Appellant, R & A Associates, providing services of Company Secretary in terms of Section 65(85) of Finance Act, 1994.
- The department on scrutiny of records observed that they are not showing certain expenses like, conveyance, courier charges, miscellaneous expenses, stationery charges and travelling expenses etc., in their ST- 3 returns.
- A show cause notice was issued to the appellant demanding tax along with interest and penalty alleging that these expenses are deductable from the gross receipt for arriving at the assessable value.
Issue –
- Whether the amount received by the Appellants from their clients in respect of certain expenses on actual basis needs to be included in the gross value charged for the purpose of levy of service tax?
Order –
- The Tribunal observed that the expenses incurred by the Appellants were not being reimbursed on the actual basis by the client. On the contrary, the Appellants have submitted that these were being reimbursed by the clients on the actual basis for which they were issuing debit notes, and not invoice.
- Therefore, the nature of the expenses / cost is nothing but reimbursable expense / cost. The provision under which such expense / costs were proposed to be included i.e. Rule 5 has been held to be ultra virus, and as such provision is no longer applicable and therefore such reimbursable expenses cannot be included in the gross value charged even by invoking Section 67. It is only after the amendment in the definition of consideration in 2015, such reimbursement can be included in the gross value charged.
- The demand cannot be sustained and therefore the Order of the Commissioner (Appeals) is set aside, and appeal is allowed.
Download Case Law
