Order Date – 10 May 2023

Parties:  M/s. Boeing India Defense Pvt. Ltd. Vs Principal Commissioner of Central Goods & Service Tax, Delhi South Commissionerate

Facts – 

• The Appellant, M/s. Boeing India Defense Pvt. Ltd., employed employees of TBC on secondment basis. The Appellant entered into a salary reimbursement agreement with TBC to facilitate secondment of employees from TBC to it and payment of remuneration to the seconded employee in their home country.
• A show cause notice was issued demanding service tax on the expenditure incurred towards hotel stay, school tuition fees considering the same as part of the consideration paid for import of manpower services from April 2015 to June 2017.
• The adjudicating authority confirmed part of the demand along with interest and penalty and the rest of the demands were dropped. Both the appellant and department filed the appeal.

Issue – 

• Whether reimbursable expenses are includible in the gross value for levy of service tax?

Order – 

• The Tribunal observed that the issue is no longer res integra. The Hon’ble High Court of Delhi in the case of Intercontinental Consultants & Technocrats Pvt Ltd Vs. Union of India held that reimbursements of amounts it received cannot be charged to service tax.
• Further the Apex Court in the case of Union of India and Anr. v. M/s. Intercontinental Consultants and Technocrats Pvt. Ltd. clarified that the value of service tax cannot be anything more or less than consideration paid as quid pro quo for rendering such services. Accordingly, it was held that Section 67 of Finance Act, 1994 do not allow inclusion of reimbursable expenses in valuation of service rules.
• Hence the department’s appeal is dismissed.