ST - Valuation - Inclusion of Reimbursable expenditure - Deliberate splitting is not permissible - CESTAT orders pre-deposit
THE dispute relates to the question whether reimbursable charges are includable in the taxable value. During the hearing of Stay Petition, the petitioner relied on the judgement of Delhi High Court , wherein the High Court held that Rule 5(1) of the Service Tax Valuation is ultra vires the Finance Act, 1994.However, the Tribunal was not impressed and ordered pre-deposit by holding that:
The expenses incurred were directly allocable to generate the service provided and no way can be held to be avoidable to call the same reimbursable for incremental value addition to the service. It appears that revenue lifted corporate veil to go inside the transactions for ascertaining the truth behind the operation. The facts and circumstances of the case suggest that the appellant has adopted a novel way of splitting the consideration with nomenclature of reimbursement of expenses. We do appreciate that rule should not be a tyrant but should be a servant of law. But, deliberate splitting is not possible to be ruled out when splitting is not intended by law. Once splitting is attributable to a motive, the appellant cannot get any shelter under the purview of law.