The Ahmedabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that other than service charge of service of Customs House Agent (CHA) any reimbursable expenses incurred on behalf of the clients is not liable to service tax.
The bench of Ramesh Nair (Judicial Member) and C.L. Mahar (Technical Member) has observed that the reimbursement of actual expenses incurred such as port operation etc. the appellant is taking reimbursement of the actual amount by raising separate bills and the same is not liable for service tax under the CHA Service.
The appellant/assessee was engaged in providing Custom House Agent (CHA) service. The premises of the appellant was searched on 09.09.2008. Statement of A.K. Biswas was recorded on 12.09.2008, in which it was stated by him that he was registered with the service tax department and was filing the returns regularly. He was raising two sets of invoice, one for agency charges and other for reimbursement of expenses. It was also stated by him that from April, 2007 onwards, the service tax was paid on the total value realized.
After investigation, show cause notice was issued demanding service tax towards CHA and towards Business Auxiliary Service (BAS), and imposition of penalty including recovery of interest.
The Adjudicating Authority, confirmed the demand imposed penalty under section 76, 77 and 78 and ordered for recovery of interest.
The appellant preferred an appeal, by which the appellate authority has held that the appellant having failed to satisfy the conditions of Rule 5 (2) of the Valuation Rules, 2006, confirmed the demand of service tax and corresponding interest and penalty for the period from 18.04.2006 to 10.05.2007.
The appellate authority has upheld the demand of service tax under BAS amounting to Rs. 51,741/- and has allowed the appeal of the department for imposition of penalty under section 77 amounting to Rs. 5,000/-.
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The assessee contended that it is paying service tax regularly and correctly on the CHA service however on the reimbursement of actual expenses incurred such as port operation etc. the appellant is taking reimbursement of the actual amount by raising separate bills and the same is not liable for service tax under the CHA Service. As regards the service tax demand on Business Auxiliary Service as commission, it is not taxable during the period 01.20.2003 to 31.03.2004 under Notification No. 13/2003-ST dated 20.06.2003 therefore, the demand of Rs. 31,859 is not sustainable.
The tribunal while partially allowing the appeal held that the demand on such reimbursable expenses is set-aside. As regards the demand of service tax on Business Auxiliary Service (commission), the demand of Rs. 31,859/- for the period 01.10.2003 to 31.03.2004 is not sustainable as it is covered under general exemption Notification No. 13/2003-ST dated 20.06.2003. Therefore, this demand of Rs. 31,859/- is set-aside and the remaining demand on Commission is upheld.
Case Title: A K Biswas Versus Commissioner of Central Excise & ST, Ahmedabad
Case No.: Service Tax Appeal No. 13180 Of 2013-DB
Date: 06.09.2024
Counsel For Appellant: NK Tiwari
Counsel For Respondent: AR Kanani
