Per AJAYAN T.V.

1. Thulasidas Khimji, the Appellant herein, has assailed the impugned Order in Appeal No.652/2016 (STA-I) dated 22.11.2016 (impugned order), whereby the Appellate Authority has allowed the Department’s Appeal by way of remand.

2. Brief facts are that the appellants is licensed under Customs Act as Customs House Agent and registered with the Service Tax Commissionerate for providing Custom House Agent service. During the course of audit conducted by the Internal Audit party of the Service Tax Commissionerate, it was noticed that the Appellant, apart from collecting charges for providing CHA service, had also collected IAAI Charges, Delivery order charges/Air freight charges, EDI charges, survey charges, warehousing charges, steamer agent charges, container freight station charges and terminal handling charges. The Appellant had not paid service tax on these charges claiming these to be reimbursable expenditure not leviable to service tax. The Department citing Rule 5(1) of the Valuation Rules to contend that expenditure or cost incurred by service provider in the course of providing taxable service is includible in the taxable value and contending that the Appellant had not fulfilled the conditions specified in Rule 5(2) ibid to claim exclusion of the above expenditure as a ‘Pure Agent’ issued a Show Cause Notice dated 28.09.2009 in respect of the reimbursable expenditure recovered from the Appellant’s clients for the period from 19.04.2006 to 31.03.2009, invoking the extended period of limitation and demanding service tax along with applicable interest and proposing imposition of penalties under Section 76 and 78 of the Finance Act, 1994. After due process of law, the Adjudicator vide Order in Original No.52/2012 dated 15.05.2012 dropped service tax with respect to the reimbursable expenses that he found the Appellant had qualified as a ‘Pure Agent’ for exclusion of expenses taking into account the CA certificate produced by the Appellant. The Department preferred an appeal before the Commissioner of service Tax (Appeals-I) praying that the said Order in Original be set aside. The Appellate Authority, finding merits in the Department’s contention that verification of the facts given in the CA Certificate was not carried out, vide the impugned order, remanded the matter to the lower adjudicating authority. Aggrieved, and having preferred this appeal the Appellant is now before this Tribunal.

3. Ms. Vaishnavi Mahesh, Ld. Advocate appearing for the Appellant contended that all these charges are treated in the SCN as reimbursable charges and service tax has been demanded invoking Rule 5(1) of the Valuation Rules 2006. Given that Rule 5(1) of the Valuation Rules has since been struck down by the Honourable Delhi High Court in the Intercontinental Technocrats case and was further affirmed by the Honourable Supreme Court, the demands are untenable and there was no necessity to remand the matter for further verification. The learned counsel submits that the appellants did not discharge service tax on the reimbursable expenses as it is not a consideration for any services rendered. The learned counsel submits that only the service charges received as consideration for the services provided or to be provided would form part of the taxable value for the purposes of service tax and reimbursements are not liable to tax. The learned counsel submits that the Honourable Supreme Court has in the case of UOI v Intercontinental Consultants and Technocrats Pvt Ltd, reported in (2018) TIOL 76-SC-ST : 2018 (10) GSTL 401 (SC), affirmed the decision of the Delhi High Court wherein Rule 5(1) of the Service Tax Valuation Rules, 2006 which provided for inclusion of expenditures or costs incurred by the service provider in the course of providing taxable services, in the value of such taxable services, was struck down as ultra vires Section 66 and Section 67 of the Act and as travelling beyond the scope of the said sections. It was also c