Page 142 - GSTL_11th June 2020_Vol 37_Part 2

228 GST LAW TIMES [ Vol. 37
notices or circulars cannot have any bearing on scope of statutory provision or
the legislative intent behind such provisions. [para 6]
Appeal allowed
CASE CITED
Union of India v. Intercontinental Consultants and Technocrats Pvt. Ltd.
— 2018 (10) G.S.T.L. 401 (S.C.) — Relied on ................................................................................ [Para 4]
DEPARTMENTAL CLARIFICATIONS CITED
Mumbai Commissionerate Trade Notice No. 1/96-ST, dated 31-10-1996 ........................................ [Para 5]
C.B.E. & C. Circular No. 341/43/96-TRU .............................................................................................. [Para 5]
REPRESENTED BY : Shri S.K. Goel, CA, for the Appellant.
Shri S.S. Chatterjee, AR, for the Respondent.
[Order per : P.K. Choudhary, Member (J)] - Briefly stated the facts of the
case are that the Appellant is engaged in the business of providing advertising
services which includes creation of advertisements and displaying such adver-
tisements in media. The Appellant incurred certain expenses on behalf of its cus-
tomers in the nature of travel, lodging, etc. which were later reimbursed to the
Appellant on cost to cost basis without adding any mark-up.
2. During the verification of records of the Appellant for the period
from 2004 to 2006, the Department observed that service tax had not been paid
on amounts received as reimbursements and such amounts had been realised by
the Appellant by way of debit notes issued to its customers. Accordingly, Show
Cause Notice dated 11th August, 2009 was issued to the Appellant proposing
recovery of service tax of Rs. 1,56,135/- along with interest and penalty. The
Show Cause Notice was adjudicated vide Order-in-Original dated 17th February,
2011 by which the Adjudicating Authority dropped the demand proposed in the
notice. On appeal, the Commissioner (Appeals) overturned the Adjudication Or-
der and confirmed the demand along with interest and penalty, as proposed in
the Show Cause Notice. Hence, the present appeal before this Tribunal.
3. We have considered the submissions of both sides and perused the
appeal records.
4. We find that the issue to be decided in the instant case is whether the
Appellant was liable to discharge service tax on the reimbursements received by
it from its customers. On perusal of the records, we find that the contract execut-
ed by the Appellant with its customers specifically state that all out-of-pocket
and other commercial expenses shall be reimbursed to the Appellant on actuals.
Further, the Revenue has not disputed the fact that such amounts were being
received by the Appellant without any mark-up. In this regard, we refer to the
judgment of the Hon’ble Supreme Court in the case of Union of India v. Interconti-
nental Consultants and Technocrats Pvt. Ltd. [2018 (10) G.S.T.L. 401], wherein it has
been held that service tax on expenditures incurred by the service provider in the
course of providing taxable service is ultra vires Section 67 of the Finance Act
and that such expenditure cannot be considered for charging service tax.
5. The Ld. DR. drew the attention of the Bench to Trade Notice No.
1/96-ST dated 31st October, 1996 issued by the Mumbai Commissionerate under
CBEC Instruction Circular No. 341/43/96-TRU that stated that the value of taxa-
ble service in relation to advertising services shall include transportation, lodg-
ing, etc. He further reiterated the findings of the Commissioner (Appeals).
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