The Ahmedabad Bench of Customs, Excise and Service tax Appellate Tribunal (CESTAT) has held that the transportation charge reimbursement is not includible in taxable value of services.
The bench of Ramesh Nair (Judicial Member) and C. L. Mahar (Technical Member) has observed that transportation charges reimbursed to the appellant by their principals are on actual basis of the amount incurred by them on transportation of goods on behalf of their principals as pure agent and same are not includable in the taxable value of services for the appellant.
The appellant/assessee is in the business of providing clearing and forwarding agency service to Ms. Pepsico India Holdings Pvt Ltd and M/s. Adani Willmar Limited under separate contracts entered between the appellant and the service recipient. The department has started a certain investigation against the appellant on the suspicion that in addition to clearing and forwarding services the appellant had also recovered certain expenditures from their service recipient and the amount collected by the appellant from their service recipient have not been included under the taxable value for the purpose of payment of Service Tax.
The show cause notice was issued demanding Service Tax by invoking the extended period of limitation as per the provisions of sub Section 1 of Section 73. The show cause notice has also invoked provision with regard to the interest and penalties as provided under Section 75, 77 and 78 of the Finance Act, 1984, respectively. The matter had been adjudicated where all the charges as invoked in the show cause notice have been confirmed by the Adjudicating Authority.
The appellant have approached the office of Commissioner (Appeals), however, there also they did not succeed and the Commissioner (Appeal) has decided the appeal against them.
The assessee contended that the Service Tax has been demanded from the appellant in respect of amount collected by them as reimbursement charges in respect of transportation of the goods undertaken by them on behalf of their principles. The transportation activity is separately taxable under ‘Goods Transport Agency Service’ and the person availability GTA service is liable to pay Service Tax on reverse charge basis.
The assessee argued that the appellant has only made payments for good transport service on behalf of his principle client as an agent of the principles and therefore the principles were liable to discharge the Service Tax liability on reverse charge basis for Goods Transport Service Agency payments which have been made by them.
The tribunal while allowing the appeal held that if service tax due on transportation of a consignment has been paid or is payable by a person liable to pay service tax (recipient of service), then service tax should not be charged for the same amount from any other person, to avoid double taxation.
Case Title: Archna Traders Versus
Case No.: Service Tax Appeal No. 10057 Of 2019
Date: 09.09.2024
Counsel For Appellant: S J VYAS
Counsel For Respondent: Anoop Kumar Mudvel
