M/S. ABC Consultants Private Limited vs Commissioner Of Service Tax

P. Dinesha, Member (J)

This appeal is filed against the Order-in-Appeal No. 364/2013 (MST) dated 20.12.2013 passed by the Commissioner of Customs, Central Excise & Service Tax (Appeals), Chennai.

Brief facts leading to the present dispute are that the appellant is rendering ‘manpower recruitment or supply agency’ service. It is the case of the Revenue that on verification of accounts of the appellant, it appeared to them that the appellant had received Rs.11,86,998/-towards reimbursement of advertisement charges from their clients for the period from October 2007 to January 2010, on which, apparently, the appellant did not pay Service Tax. It is the further case of the Revenue that the appellant had availed input service credit on services like training, insurance on various office equipment, car hire charges and pest management services, for the above period.

Therefore, the Revenue issued a Show Cause Notice dated 20.04.2010 proposing inter alia to demand Service Tax of Rs.1,46,713/-.

It appears that the appellant filed a detailed reply dated 24.05.2010 denying any tax liability, but however, in adjudication, the Deputy Commissioner-adjudicating authority vide Order-in-Original No. 88/2010 dated 18.11.2010, rejected the explanation, thereby confirming the demands as proposed in the Show Cause Notice.

Aggrieved by the above demand, it appears that the appellant preferred an appeal before the first appellate authority, who vide impugned Order-in-Appeal No. 364/2013 (MST) dated 20.12.2013 having confirmed the demand of Service Tax, but however, recalculating the same at Rs.1,30,574/-, the present appeal has been filed before this forum.

Heard Ms. R. Sri Visvapriya, Ld. Advocate for the appellant and Shri Harendra Singh Pal, Ld. Assistant Commissioner.

The Ld. Advocate would submit at the outset that the Service Tax demand on the alleged reimbursement of advertisement charges has been settled by this very Chennai Bench in the appellant's own case for a different period vide Final Order No. 43083 of 2017 dated 04.12.2017 in Service Tax Appeal No. 296 of 2010.

Per contra, the Ld. Assistant Commissioner supported the findings of the lower authorities.

After hearing the rival contentions, we find that the only issue involved is the taxability of reimbursement of advertisement charges.

We have considered the rival contentions and we have gone through the order relied upon by the Ld. Advocate.

We find, after hearing both sides, that this Bench in its Final Order dated 04.12.2017 (supra) has, after following the decision of the Hon'ble Madras High Court in the case of Commissioner of Service Tax v. Sangamitra Services Agency [2014 (33) S.T.R. 137 (Mad.)], set aside the demand. The relevant observation of this Bench reads as under: -

“5. The issue is whether the amount of Rs. 3,39,539/-received by the appellant would fall under reimbursable expenses or not. The appellants are engaged in rendering Manpower Recruitment and Supply Agency service and not any Advertisement Agency service. This also brought out from the agreement in para-3(2), which speaks about expenses such as expenses like media, travel and stay costs etc., prior permission has to be taken and these have to be invoiced at cost. Thus it can be seen from the advertisement charges, which was incurred to be a one-time occasion and was only expenses incurred on behalf of the client which are reimbursed on actual basis. We therefore follow the decision in the in the case of Sangamitra Services Agency (supra) and hold that the demand is unsustainable. The impugned order is set aside. The appeal is allowed with consequential relief if any, to the appellants.”

In view of the above, we find the assertion of the Ld. Advocate to be true and that the issue is no more res integra since the same has been decided in the appellant's own case for a different period by this very Bench. Further, the Revenue has also not made out any case for deviating from the above order.

Hence, following the above order, we set aside the impugned order and allow the appeal with consequential benefits, if any, as per law.