By TIOL News Service

NEW DELHI, JULY 25, 2018: THE petitioner, a law firm submits that the amounts paid to senior counsel for services rendered to third party clients in the form of representation in Courts etc., cannot be subjected to service tax levy under FA, 1994, in its hands.

They have, therefore, questioned the demand made by Adjudicating Authority relying upon Rule 5 of Service Tax (Determination of Value) Rules, 2006 to hold that the reimbursement, by its clients to the petitioner, had to be included in the value of services that was subjected to levy.

The petitioner relies upon a Division Bench ruling in Intercontinental Consultants & Technocrats Pvt. Ltd. - 2012-TIOL-966-HC-DEL-ST wherein it is declared that Rule 5(1) of the Rules, to the extent it mandates inclusion of reimbursements to the assessee, in respect of payments made to third parties cannot be subjected to service tax levy. This judgment was later affirmed by the Supreme Court in - 2018-TIOL-76-SC-ST.

The Court extracted the findings of the Supreme Court and opined that in view thereof Revenue could not have included the payments received as reimbursements in the value of services rendered by it.

Consequently, the impugned order in original was quashed and the writ petition was allowed.

(See 2018-TIOL-1432-HC-DEL-ST)