AASHITA INTERNATIONAL LTD. Vs. COMMISSIONER OF SERVICE TAX

JUDGEMENT

(1.) THESE appeals have been filed by the appellants against the orders passed by the Commissioner (Appeals). The issue involved is that customs house agents (CHA's) are raising two sets of invoices over the appellants. One invoice is raised towards the customs house agent services/agency charges and the second invoice is raised for the reimbursement of other charges/incurred by the customs house agent. The Commissioner (Appeals) held that appellants are not required to pay any service tax on reimbursement of charges/expenses for the period prior to April 18, 2006 but they are required to pay service tax on such charges after April 18, 2006 with the introduction of the Service Tax (Determination of Value) Rules, 2006 for non -fulfilling the conditions laid down under rule 5(2) of these Rules. Shri P.M. Dave (Advocate) appearing on behalf of the appellants argued that amount of reimbursement charges, other than services provided, is not disputed by the Department. It was his case that section 67 of the Finance Act, 1994 is the machinery section for valuation of a service for payment of Service Tax and Valuation Rules suggesting an addition over and above the value of the service provided cannot be sustained in view of the Delhi High Court judgment in the case of Intercontinental Consultants and Technocrats P. Ltd. v. Union of India : [2013] 19 GSTR 462 (Delhi) : [2013] 59 VST 487 (Delhi) : [2013] 29 STR 9 (Delhi) under which the provisions of rule 5(1) of the Service Tax (Determination of Value) Rules, 2006 have been struck down.

(2.) SHRI M. Kutty (authorised representative), on the other hand, argued that the Commissioner (Appeals) has correctly decided the issue as the appellants have not fill filled the conditions specified in rule 5(2) of the Service Tax (Determination of Value) Rules, 2006.

(3.) FROM the above interpretation of law it is apparent that a subordinate rule cannot extend the valuation scope of a service to be determined under section 67 of the Finance Act 1944. Argument of the authorised representative that the appellants have not fulfilled the condition of rule 5(2) of the Service Tax (Determination of Value) Rules, 2006 is not relevant in view of the fact that rule 5(1) itself has been struck down by the Delhi High Court in its judgment dated November 30, 2012 and no contrary judgment of any other High Court or Supreme Court has been brought to our notice. In view of the above settled position of law the appeals filed by the appellants are allowed with consequential relief, if any. Pronounced in the court.