Reimbursement of Expenses Includible in Assessable value are not Taxable Value of Service: CESTAT

The Kolkata bench of CESTAT ruled that while reimbursement of expenses forms part of assessable value, it does not constitute taxable value for service tax purposes. The case involved a service provider disputing the inclusion of reimbursable expenses in taxable value during a Service Tax Audit for 2015-16 to mid-2017. \r

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The appellant argued they acted purely as agents, supported by agreements showing their role. The tribunal noted that from May 2015, all expenses were includible in assessable value, but this did not apply retroactively to the dispute period (2000-01 to 2004-05). Consequently, the bench held that reimbursable expenses were not taxable. \r

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The appellant's tax payment was deemed correct, and no differential tax was due. The tribunal overturned the earlier order, allowing the appeal.