2025-VIL-2183-CESTAT-CHE-ST
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SERVICE TAX CESTAT Cases

Service Tax – Section 67 of Finance Act, 1994 – Reimbursement of expenditure – Tax liability – During audit of Appellant, department noticed that Appellant have received an amount towards Consulting Engineer Service from their clients by way of income receipts, but have not paid service tax on same – Department issued show cause notice to Appellant by proposing demand of Service Tax – Adjudicating Authority confirmed demand as proposed in show cause notice – Commissioner (Appeals) upheld order passed by Adjudicating Authority – Whether reimbursement of expenditure incurred towards experts advice and legal charges will form part of taxable value under Section 67 of the Act – HELD – Appellant had paid for Advocates on request of its clients (Dyeing factory owners) on premise of an agent, as they are located at Tirupur and Appellant stationed in Chennai was requested to co-ordinate with different agencies like High Court, Anna University and IIT Chennai. Amount was recovered by Appellant from Dyeing Factory owners. Expenditure incurred is not part of Consulting Engineering Services. No service element or profit margin was involved in reimbursements and these were bona fide expenses incurred on behalf of clients which is beyond scope of project management (contracts) and therefore, reimbursements will not form part of gross value of service under Section 67 of the Act. Impugned order passed by Commissioner (Appeals) is set aside – Appeal allowed
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