A two member bench of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ), Allahabad has held that the conditions prescribed for exclusion of certain expenditure or cost has to satisfy the conditions prescribed in Rule 5 Service Tax ( Determination of Value ) Rules, 2006. The bench observed that the assessee is not acting as a pure agent of the service recipient for diesel filing in as much as no third Party is involved in the transaction.
The Assessee, M/s Adept were engaged in the business of operation and maintenance of telecom/mobile towers. During the period in dispute, the Appellant provided service of diesel filling in the DG sets installed near the telecom towers maintained by BCL Secure Premises Private Limited. For providing such service, the parties entered in to a Memorandum Of Understanding ( ‘MOU’ ).
The assessee received agreed service charges for providing the above service and also paid the applicable service tax. Independently they had supplied diesel to be filled in the DG Sets at telecom tower site of the recipient. For the same they received agreed diesel charges. The supply of diesel has no connection/relation with the above output services.
Assessee contended that supply of diesel for DG Sets at Telecom Tower sites cannot be treated as service and that it is simply sale of diesel i.e., trading of goods which is outside the purview of Service Tax. Assessee also pointed out that the service recipient has deducted TDS only on service charges paid under Section 194C of the Income Tax Act and not on the value of diesel supplied and the Act restricts the deduction of TDS to sale.
Revenue contended that supply of diesel for DG Sets at Telecom Tower sites should be treated as service. Revenue contended that as per Rule 5(1) of Service Tax ( Determination of Value ) Rules, 2006, all the expenditures or costs incurred by the service provider in the Course of providing taxable service shall be treated as consideration for the taxable service provided and the same shall be included in the value for the purpose of charging service tax.Revenue estimated the total service tax dues against the appellant is Rs.4,68,552/-Therefore, it was requested to pay the same along with interest.
The bench comprising P.K. Choudhary, Member( Judicial ) and Sanjiv Shrivastava, Member ( Technical ) held that “consideration” includes any amount of expenditure or cost incurred by the service provider ( may be reimbursable ) which is charged in the course of providing a taxable service. The bench further held that the conditions prescribed for exclusion of certain expenditure or cost has to satisfy the conditions prescribed in Rule 5 Service Tax ( Determination of Value ) Rules, 2006.
Assessee was represented by Bharat B. Raichandani. Revenue was represented by Sandeep Pandey.
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