No service tax on Reimbursable Expenses: CESTAT [Read Order]
![No service tax on Reimbursable Expenses: CESTAT [Read Order]](https://www.taxscan.in/wp-content/uploads/2023/09/No-service-tax-on-Reimbursable-Expenses-CESTAT-Reimbursable-Expenses-service-tax-taxscan.jpg "No service tax on Reimbursable Expenses: CESTAT [Read Order]")
The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that service tax cannot be levied on reimbursable expenses. The appellants, M/s. Paper and Allied Conversions, undertook job work manufacture which attract service tax under the category of ‘Business Auxiliary Service’. The appellant received consideration in the nature of reimbursable...
The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that service tax cannot be levied on reimbursable expenses.
The appellants, M/s. Paper and Allied Conversions, undertook job work manufacture which attract service tax under the category of ‘Business Auxiliary Service’. The appellant received consideration in the nature of reimbursable expenses and job charges.
The Department noticed that the appellant did not discharge service tax on reimbursable charges. Show cause notice was issued proposing to demand service tax on the reimbursable expenses received by the appellant. After due process of law, the original authority confirmed the demand along with interest and imposed equal penalty under Section 78 of the Finance Act, 1994. On appeal, the Commissioner (Appeals) upheld the same. Hence the present appeal.
The issue that arises for consideration in this appeal is whether the demand of service tax on reimbursable expenses is legal and proper.
Manne Veera Niveditha appeared for the appellant and submitted that the period involved is from 2006-07 to 2009-10 and the demand is on reimbursable expenses which cannot sustain as per the decision of the Apex Court in the case of Union of India Vs Intercontinental Consultants and Technocrats Pvt.
A Two-Member Bench comprising CS Sulekha Beevi CS, Judicial Member and Vasa Seshagiri Rao, Technical Member observed that “The Supreme Court in the case of UOI Vs Intercontinental Consultants and Technocrats Pvt. Ltd. has held that the demand of service tax on reimbursable expenses cannot sustain. The Tribunal in the decision of Broekman Logistics (India) Pvt Ltd, has set aside the demand applying the said decision of the Apex Court.”
“After appreciating the facts and following the above decisions, we are of the considered view that the demand cannot sustain and requires to be set aside which we hereby do. Appeal is allowed with consequential relief, if any” the Bench concluded.
To Read the full text of the Order CLICK HERE
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