Reimbursements Received By Assessee Can't Be Considered As 'Consideration' Towards Any Taxable Service: CESTAT
The Kolkata Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that the reimbursements received by the assessee cannot be considered as 'consideration' towards any taxable service. The Bench of Ashok Jindal (President) and K. Anpazhakan (Technical) has observed that, “the service rendered by the appellant is not for any other company but to...
The Kolkata Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that the reimbursements received by the assessee cannot be considered as 'consideration' towards any taxable service.
The Bench of Ashok Jindal (President) and K. Anpazhakan (Technical) has observed that, “the service rendered by the appellant is not for any other company but to themselves. Thus, there is no service provider and service receiver relationship exists in the transaction.”
In this case, the assessee/appellant has a joint venture with Num Aligarh Refinery Ltd and Oil India Limited. As a lead JV partner, the cost of such personnel is reimbursed to the assessee on actual basis.
The department considered the reimbursable expenses as 'consideration' towards rendering of the taxable service of 'supply of manpower' and accordingly demanded service tax from the assessee.
A show cause notice was issued to the assessee. The Ld. Commissioner confirmed the demand of Service Tax. Aggrieved by the decision of Ld. Commissioner, the assessee filed an Appeal before Commissioner of Central Excise & Service Tax, who upheld the order of the Ld. Commissioner. The assessee has challenged the order passed by the Commissioner of Central Excise & Service Tax before the Tribunal.
The assessee contended that such reimbursable expenses is not 'consideration' under section 67 of the Finance Act, 1994. As the reimbursement was received on actual basis and the amount received was not for provision of any service and therefore, demand of Service Tax on reimbursement is not sustainable.
Whereas it was contended by the Department that the assessee has been rendering the service of supply of manpower service liable to service tax.
The Tribunal observed that as the assessee is the Lead Partner with 51% share, the service rendered by the assessee is not for any other company but to themselves. Thus, there is no service provider and service receiver relationship in the transaction.
The Tribunal held that the reimbursements received by the assessee cannot be considered as 'consideration' towards any taxable service.
The Tribunal stated that, “the personnel engaged are the employees of the assessee company and the assessee is paying all salaries etc. to such employees. Only cost of salary of such employees are reimbursed by the JV on actual basis. Thus, the whole arrangement between the assessee and the JV does not fall under the taxable service of manpower supply service as defined under rule 2(g) of the Service Tax Rules.”
In view of the above, the Tribunal allowed the appeal.
Counsel for Appellant/ Assessee: Sneha Das
Counsel for Respondent/ Department: S. K. Dikshit
Case Title: M/s. Assam Gas Company Limited V. Commissioner of Central Excise & Service Tax
Case Number: Service Tax Appeal No. 75603 of 2015
