CESTAT Bangalore Sets Aside Service Tax Demand Against Hindustan Newsprint Employees Co-operative Bank
The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Bangalore, has granted relief to Hindustan Newsprint Employees Co-operative Bank Ltd. in a service tax matter.
It observed that reimbursed employee wages and other employment-related benefits cannot be included in the taxable value for service tax under Manpower Recruitment or Supply Agency Service for the period prior to 14 May 2015.
The bench comprising Judicial Member P.A. Augustian and Technical Member R. Bhagya Devi observed that the issue is squarely covered by the Supreme Court's ruling in Union of India v. Intercontinental Consultants and Technocrats Pvt. Ltd. 2018 (10) GSTL-401 (SC), which clarified that reimbursable expenses could not form part of the taxable value before the amendment to Section 67 of the Finance Act, 1994.
The dispute arose after the Department demanded service tax on the entire amount received by the appellant, including reimbursement of workers' wages and other employee benefits.
The adjudicating authority and the Commissioner (Appeals) had upheld the demand, observing that there was no statutory provision permitting exclusion of reimbursed expenses from the taxable value.
The Tribunal noted that the appellant had already secured relief on the same issue in its own earlier case and that the present dispute related to the period from 1 April 2009 to 31 March 2012, well before the 2015 amendment.
"The period of dispute in the present cases are from 01.04.2009 to 31.03.2012, which is much prior to the amendment to Section 67 of the Finance Act, 1994; hence, the above decision of the Hon'ble Supreme Court is relevant to the present set of facts and the period of dispute", the Court observed.
Accordingly, it set aside the impugned orders and allowed the appeals with consequential relief in accordance with law.
For Appellant: K. Hariharan, Chartered Accountant
For Respondent: Malatesh S Kulkarni, Asst. Commissioner