Consulting Engineer Services - Reimbursement of expenses - Held, extended period not invokable as there is bonafide belief backed by CBEC's clarification and Tribunal decisions

Scott Wilson Kirkpatrick India Pvt. ltd. vs. Commissioner of Central Excise, Jaipur. 2013 (30) STR 652 (Tri-Del)

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Facts:

The appellant provided services of Consulting Engineer to National Highways Authority of India (NHAI) and received certain consideration in the form of reimbursements. As per revenue, the said consideration formed part of the value of service and hence levied tax, interest and penalty. In support of their view, they relied onMett. Macdonald Ltd. vs CCE 2006 (2) S.T.R. 524 (Tri.- Del) and Shri Bhagavathy Traders vs. CCE, Cochin-2011- TIOL-1155-CESTAT-BANG-LB. The appellant relied on CBEC Circulars B.43/5i97-

TRU dated 02-07-1997 and B11/1/98-TRU dated 07-10-1998 which clarified that reimbursed expenses incurred by Consulting Engineers did not form part of the value of service and also relied on the decision in their own case reported in 2007 (5) S.T.R. 118 to the effect that such expenses would not be construed value of service of Consulting Engineers.

Held:

Allowing the appeal, it was held that the decision of the larger Bench of the Tribunal in Shri Bhagavathy Traders was under challenge before the Apex Court. In view of the clarification issued by the CBEC and the decisions relied by the appellant, the action of the appellant was bonafide and suppression cannot be alleged for invoking extended period of time for demanding tax.