2026-VIL-1890-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Taxability of consulting engineer's service provided by body corporate - Section 65(31) and Section 65(105)(g) of the Finance Act, 1994 - The Appellant, a body corporate, provided consulting engineers services to a government authority during July 2003 to September 2005. It paid Service Tax on the gross amounts charged up to June 2003 and thereafter only on the remuneration for local professional staff and support staff. It did not pay Service Tax on the amounts received under other heads such as transportation, travel, office rent, supplies, utilities, document printing and contingencies. SCNs demanded the Service Tax, which was confirmed by the adjudicating authority, and the FAA confirmed part of the demand in remand proceedings. The Appellant contended that bodies corporate were brought within the ambit of consulting engineers only by an amendment. The Respondent contended that the expression person included bodies corporate even before the amendment - Whether a body corporate was covered by the definition of consulting engineer before the amendment - HELD - Bodies corporate, being persons, were covered under the definition of consulting engineer even before the amendment. All contrary decisions on this question of law stand overruled - The contention of the Appellant is rejected - Valuation of taxable service - Reimbursable expenses - Section 67 of the Finance Act, 1994 and Rule 5 of the Service Tax (Determination of Value) Rules, 2006 - The dispute was only with respect to the amounts received as reimbursable expenses, and the demand related to the period before 2015. The Appellant contended that reimbursable expenses do not form part of the value of the taxable service. The Respondent supported the demand - Whether Service Tax is payable on reimbursable expenses for the period before the amendment of Section 67 - HELD - Rule 5 provided for inclusion of reimbursable expenses in the taxable value, but the Rule has been held to be ultra vires of Section 67. Section 67 was amended later to include reimbursable expenses in the taxable value. The present demand pertains to the period before the amendment and is therefore not sustainable - The impugned order is set aside and the appeal is allowed.
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