S. JAYASHREE Vs. COMMISSIONER OF C. EX., MANGALORE

JUDGEMENT

(1.) THE appellants are challenging the OIA No. 181/2006 -C.E. dated 13 -6 -2006. The appellant is a clearing and forwarding agent to M/s. Visak Industries. The appellants contention is that they are eligible for abatement of godown rent and staff salary from the gross value of services on the ground that these expenses are being reimbursed on actual basis by the principal and are not liable to be included in their gross receipts for calculating service tax liability - The learned representative relied on the ruling of the Mumbai Bench in the case of Glaxo Smithkline Pharmaceuticals Ltd. v. CCE, Mumbai, 2006 (3) S.T.R. 711 (T) = 2005 (188) E.L.T. 171 (Tri -Mum.) wherein Mumbai Bench has held that services rendered towards publicity, freight, travelling, power and fuel, rent and miscellaneous expenses cannot be brought under the definition of management consultancy services. It has also been held that service tax is leviable on expenses towards such other expenses recovered by appellants. It was further held that staff costs incurred of eight marketing teams allocated to company are merely executory expenses and not advisory costs for marketing products of groups company and they are not taxable. He further submitted that in similar cases this Bench has set aside the inclusion of godown rent, staff salary from the gross value of taxable services.

(2.) LEARNED DR submits that the Commissioner (Appeals) in the case of Business Aids Marketing Division, 2006 (2) S.T.R. 81 (Commr. Appl) has upheld the inclusion of these elements in the service tax.

(3.) ON a careful consideration, I agree with learned representative that elements which are not forming part of taxable services other than receipt of Commission cannot be brought within the ambit of service tax. The rent paid towards maintaining godown and staff salary cannot be considered as the service charges received by the assessee from their principals. Moreover, the present view taken by me is in the light of the cited judgments by representative in the case of Smithkline Pharmaceuticals Ltd. (supra). The citation referred to by DR is of Commissioner (Appeals), which may be under appeal and is not binding on the Tribunal. Respectively following the ratio of Smithkline Beecham, I hold that the godown rent and staff salary cannot be added to the gross value of taxable services as contended by the appellants. The appeal is allowed by setting aside the impugned order with consequential relief if any.