Expenses included in Gross Transaction Value and Suffered Service Tax: CESTAT dismisses Revenue Appeal [Read Order]

The Bangalore Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) dismissed revenue appeal as the expenses incurred by the petitioner was included in the gross transaction value which has already suffered service tax.

The respondents are NBFC and are, inter alia, engaged in providing gold loan to various customers. It is alleged that in the process of rendering said services, certain expenses are incurred viz. inspection charges, property evaluation fees, postage charges etc. during the period April 2010 to March 2016.

Alleging that the service tax was not paid by including the value of the said expenses in their gross transaction value, show-cause notices were issued proposing recovery of total service tax of Rs.20,44,84,816/- for the said period along with interest and penalty. On adjudication, the learned Commissioner dropped the notice. Hence, the Revenue is in appeal.

The AR for the Revenue reiterating the grounds of appeal submitted that even though expenses incurred by the respondent towards postage, telegram, telephone charges in rendering the taxable service, however, the same are not considered in the gross taxable value as prescribed under Section 67(1) of the Finance Act, 1994 read with Rule 5 of Service Tax ( Determination of Value ) Rules 2006. It was submitted that the adjudicating authority dropped the demand without considering the value of expenses which ought to have been included in the gross transaction value.

The advocate for the respondent submitted that whatever expenses incurred by them in rendering taxable services are included in the gross transaction value and not separately recovered from the customers; therefore, the allegation in the show-cause notice is not tenable and that all these expenses were included in the gross transaction value and suffered service tax and therefore demanding service tax again adding the gross transaction value would result into recovery of the service tax twice on the same value.

A Two-Member Bench of DM Misra, Judicial Member and R Bhagya Devi, Technical Member observed that “In the Review Order, only the statutory principle of law has been reiterated and no evidence has been adduced to negate the specific findings of the adjudicating authority holding that the service tax on all these expenses, by including the same in the gross transaction value has been discharged by the respondent. In the result, the impugned order is upheld and the Revenue’s appeal being devoid of merit, accordingly dismissed.”

To Read the full text of the Order CLICK HERE

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