LISY P.T., PROPRIETOR OF M/S. LISY AGENCIES Vs. UNION OF INDIA, REPRESENTED BY ITS SECRETARY, MINISTRY OF FINANCE (DEPARTMENT OF REVENUE), NEW DELHI, PIN

JUDGEMENT

(1.) The petitioner, who is stated to be carrying on the business of buying and selling of goods as a distributor for various companies, has approached this Court aggrieved by Ext.P3 order of the 2nd respondent, whereby the said respondent has confirmed a demand of service tax and penalty on the petitioner, for the years 2009-10 to 2012-13. In the writ petition, the case of the petitioner is essentially that the 2nd respondent erred in confirming a demand of service tax on the petitioner, by including in the value of taxable services, the amounts that were received by the petitioner by way of reimbursement of various expenses, which according to the petitioner, would not fall within the definition of value of taxable services for the purposes of levy of service tax. It is in particular pointed out that the Delhi High Court, in the decision in Intercontinental Consultants and Technocrats Pvt.Ltd. v. Union of India [2013 (29) STR 9] , had found that Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006, to the extent it directs the inclusion of expenditure/costs such as travel, hotel, stay, transportation etc. incurred by a service provider, in the value of taxable service for the purposes of levying service tax, was ultra vires Section 67 of the Finance Act 1994 as amended, both before and after its amendment with effect from 01.05.2006. It is pointed out that, in view of the decision of the Delhi High Court referred above, the findings in Ext.P3 order of the 2nd respondent, cannot be legally sustained. It is further pointed out that the 2nd respondent has not gone into the aspect of the real nature of the transaction between the companies, whose products were being marketed by the petitioner, and the petitioner, in that while the petitioner would contend that the relationship between the said companies and the petitioner was one of vendor and purchaser, the 2nd respondent in Ext.P3 order has found that the petitioner was actually a distributor/agent of the aforesaid companies.

(2.) I have heard the learned counsel for the petitioner and learned Standing Counsel for the respondents.

(3.) On a consideration of the facts and circumstances of the case and the submissions made across the bar, I find that the contention with regard to the validity of the Rule 5(1) of the Service Tax (Determination of Value)Rules 2006 has already been gone into by the Delhi High Court in the decision referred above. By the said decision, the Delhi High Court took the view that the provisions of Rule 5(1) to the extent they contemplated the inclusion of expenses and costs, which would not otherwise be in the nature of value of taxable services, in the value of taxable the services, was ultra vires the valuation section of the Finance Act 1994, as amended. In the instant case, however, I find that there is a factual dispute with regard to the nature of the expenses that were included in the value of taxable services, as far as the petitioner is concerned. The petitioner contends that the additional amounts received by her were in the nature of trade discounts and not additional consideration for the services rendered by her for the principal. In my view, this is an aspect that would have to be agitated by the petitioner before the appellate authority under the Finance Act 1994 as amended, governing the levy of collection of service tax. Ext.P3 order of the 2nd respondent was passed on 27.06.2016 and was received by the petitioner, shortly thereafter. The petitioner, thereafter, approached this Court on 27.09.2016, within the statutory period for approaching the appellate authority under the Finance Act 1994 as amended (when one includes even the condonable period of limitation under the statute). I, therefore, relegate the petitioner to her alternate remedy of filing an appeal against Ext.P3 order before the Commissioner, Appeals, in terms of Section 84 of Finance Act, 1994. If the petitioner files an appeal against Ext.P3 order, before the Commissioner, Appeals, within a period of one month from the date of receipt of a copy of this judgment, by paying the required statutory pre-deposit of the tax/penalty confirmed against her by Ext.P3 order, then the appellate authority shall consider the appeal preferred by the petitioner on merits, and pass orders thereon, after hearing the petitioner, within a further period of three months from the date of receipt of a copy of this judgment. I make it clear that, in the event of the petitioner filing the appeal within time granted above, the recovery of amounts confirmed against the petitioner by Ext.P3 shall stand stayed till such time as orders are passed by the appellate authority as directed, and the appellate order communicated to the petitioner.