IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P.

MONDAY, THE 10^TH DAY OF JUNE 2024 / 20TH JYAISHTA, 1946 WP(C) NO. 28796 OF 2017 PETITIONER:

M/S. A.M.FISHERIES XTII/378, KAKKAZHAM,VANDANAM P.O., ALAPPUZHA-688 005, REPRESENTED BY ITS MANAGING PARTNER M. NIZAM.

BY ADV SRI.JOSE JACOB RESPONDENTS:

1 UNION OF INDIA REPRESENTED BY SECRETARY,MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, NORTH BLOCK, NEW DELHI-110 001.

2 ASSISTANT COMMISSIONER OF CENTRAL EXCISE CUSTOMS & SERVICE TAX, OFFICE OF THE ASSISTANT COMMISSIONER OF CENTRAL EXCISE, CUSTOMS & SERVICE TAX, CENTRAL EXCISE BHAVAN, KATHRIKADAV, KOCHI-682 017.

3 SUPERINTENDENT OF CENTRAL EXCISE SERVICE TAX (SW), ERNKULAM DIVISION II, KOCHI- 682 018.

SRI.SREELAL N. WARRIER, SC THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 10.06.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

JUDGMENT

The issue raised in this writ petition is covered in favour of the Union of petitioner by the judgment of the Hon’ble Supreme Court in India v. Intercontinental Consultants and Technocrats Pvt. Ltd.

[2018 (10) GSTL 401 (SC)]. Rule 5(2) of the Service Tax (Determination of Value) Rules, 2006 to the extent it includes reimbursable expenses in valuation of services has been struck down as unconstitutional by the Hon’ble Supreme Court. The said Rule has thereafter been amended in the year 2015. The finding of the Hon’ble Supreme Court in Intercontinental Consultants (supra) is that the enabling provision (namely Section 67 of the Finance Act, 1994) did not provide for the inclusion of reimbursable expenses in the valuation of services. With effect from 14.5.2015 Section 67 has been amended by the Finance Act, 2015 providing for the inclusion of reimbursement of expenses also in the valuation of services.

The issue in this writ petition pertains to a period prior to the amendement of Section 67 by the Finance Act, 2015. In the light of the above, this writ petition will stand ordered extending the benefit of the declaration contained in the judgment of the Hon’ble Supreme Court in Intercontinental Consultants (supra) to the petitioner and holding that the inclusion of the value of reimbursable expenses for any period prior to the amendment of Section 67 by the Finance Act, 2015 for the purpose of valuation of services is illegal. Consequently Ext.P5 to the extent it imposes the liability to pay service tax on amounts recieved by the petitioner as re-imbursement of expenses will stand quashed.

Sd/-

GOPINATH P.

JUDGE Sru APPENDIX OF WP(C) 28796/2017 PETITIONER’S EXHIBITS EXHIBIT P1 COPY OF THE AGREEMENT DATED 01.10.2011. EXHIBIT P2 COPY OF THE AGREEMENT DATED 01.04.2013.

EXHIBIT P3 COPY OF THE SHOW CAUSE NOTICE DATED

20.10.2016.

EXHIBIT P4 COPY OF THE REPLY TO SHOW CAUSE NOTICE DATED

27.01.2017.

EXHIBIT P5 COPY OF THE ORDER IN ORIGINAL DATED

30.05.2017.