Order Date – 12 June 2023

Parties: M/s. United India Shipping Services Vs Commissioner of GST & Central Excise

Facts – 

• The Appellant, M/s. United India Shipping Services, is engaged in providing services in the nature of Custom House Agent Services.
• During the course of audit, it was noticed that the appellant also collects LCL charges, deconsolidation charges, transportation charges, DO charges, terminal handling charges, demurrage charges, documentation charges and other charges from their clients. The appellant had excluded these charges while computing the total taxable value and had not discharged service tax on such charges on the claim that these are only reimbursable expenditure.
• Show cause notice dated 14.10.2009 was issued proposing to demand service tax on such expenses incurred by the appellant for providing CHA services. Demand was confirmed along with interest and penalty.       

Issue – 

• Whether service tax is payable on reimbursable expenses incurred by the appellant?

Order – 

• The Tribunal observed that from the SCN itself it is seen that the demand has been made on the reimbursable expenses incurred by the appellant. it is understandable that such charges are collected by the appellant from their clients and paid to the concerned service provider.
• It is settled position that the reimbursable expense is not subject to levy of service tax as per the decision of the Hon’ble Apex Court in the case of Union of India Vs Intercontinental Consultants and Technocrats Ltd.
• Following the above decision of Hon’ble Apex Court, it was held that the demand cannot sustain. The impugned order is set aside. Appeal is allowed.