In the case of M/s INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD.SC rules on applicability of service tax on reimbursable expenditure incurred by service provider, in terms of Section 67 of Finance Act r/w Rule 5 of Service Tax (Determination of Value) Rules 2006; Dismisses Revenue appeal against Delhi HC judgment, holds that HC was right in interpreting Sections 66 and 67 to say that value of taxable service shall be gross amount charged by service provider ‘for such service’ and that value cannot be anything more or less than consideration paid as quid pro quo for rendering such service; Accordingly, perusing the provisions of Section 67 both prior to and post amendment w.e.f. May 1, 2006 as well as the charging provision viz. Section 66, SC observes that for “valuation of taxable services for charging service tax, the authorities are to find what is the gross amount charged for providing ‘such’ taxable services. As a fortiori, any other amount which is calculated not for providing such taxable service cannot a part of that valuation as that amount is not calculated for providing such ‘taxable service’.”; Resultantly, holds that Rule 5, which brings within its sweep the expenses incurred while rendering the service and reimbursed by recipients, goes much beyond the mandate of Section 67; Reiterates the principle enunciated by Apex Court inter alia in Babaji Kondaji Garad, that rules cannot go beyond the statute; However, noting the amendment to Section 67 by Finance Act 2015 whereby clause (a) which deals with ‘consideration’ was suitably amended to include reimbursable expenditure or cost, SC states, “only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax.”; Clarifies that since there was a substantive change brought about with an amendment to Section 67, same has to be prospective in nature and in this regard, refers to Constitution Bench ruling in Vatika Township Pvt. Ltd.; W.r.t. connected appeals / matter, SC reiterates that value of free supplies of material (viz. diesel and explosives) would not warrant inclusion while arriving at the gross amount charged on which service tax is paid : SC
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