Service Tax Court Case - Chennai Service Tax V/s J.M.Baxi & Co
CST, CHENNAI - I V/s M/s. J.M. BAXI & CO
BRIEF: Courtesy services or assistance rendered by the service provider to the service receiver beyond the scope of the contractual obligations shall not be included in the taxable value of services
OUR COMMENTS: In the above case, the assessee is registered in the category of steamer agent and pays service tax on the service charges collected from their customers (shipping lines) accordingly. It also incurs additional expenditure towards arranging drinking water, garbage clearance, transport for crew etc. The shipping line reimburses these expenses to the assessee and the same does not form part of the service charges. The charges for providing steamer agent services are collected separately and service tax is being paid on the said amount.
The Department contended that sum reimbursed by the shipping lines against additional expenditure incurred by the asessee should be included in the value of taxable services.
The Hon' ble CESTAT held that the additional expenditure incurred by the assessee are only courtesy services or assistance rendered to shipping lines, beyond the scope of any contractual obligations. The assesee is the ship’s conduit in the port of call for contracted steamer agency service. There can arise requests for assistance for the ship or her offiers, on issues not related to ship’s husbandry or booking etc. of cargo. And, because of ongoing relationship with the shipping line, the steamer agents extend such assistance.
Therefore, the value reimbursed thereof is not required to be added to the value of taxable services and hence no tax liability will arise on such value.
[Decided in favor of assessee]
JAV & ASSOCIATES