The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi bench has held that the reimbursable expenses to Chartered Accountant is not subject to service tax under the provisions of the Finance Act, 1994.
A division bench Of Justice Dilip Gupta, CESTAT President and Mr. P V Subba Rao, Member (Technical) was considering an appeal filed by RMA & Associates, engaged in providing “chartered accountant services”.
The dispute was in relation to the non-payment of service tax on the amount representing reimbursement of expenses like conveyance, travelling and mobile expenses.
The issue, in respect of reimbursable expenses has been considered and decided by the Supreme Court in Union of India vs. Intercontinental Consultant and technocrats wherein it was held that “Sub-section (4) of Section 67 empowers the rule making authority to lay down the manner in which value of taxable service is to be determined. However, Section 67 (4) is expressly made subject to the provisions of sub-section (1). Mandate of subsection (1) of section 67 is manifest, as noted above, viz., the service tax is to be paid only on the services actually provided by the service provider.”
“Thus, service tax could not have been levied on the reimbursed expenses,” the Tribunal said.
Relying on the above findings and Apex Court decision, the Tribunal concluded that the Commissioner (Appeals), therefore, was not justified in holding that the reimbursable expenses would be subjected to service tax.
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