"CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL NEW DELHI. PRINCIPAL BENCH, COURT NO. IV SERVICE TAX APPEAL NO. 50216 OF 2019 [Arising out of the Order-in-Original No. 13-21/PK/GST/DE/2018-19 dated 25/09/2018 passed by The Commissioner of Central and Goods Service Tax, New Delhi – 110 002.] Principal Commissioner of ……Appellant Central GST & CX, Delhi, CR Building, IP Estate, New Delhi – 110 002. Versus M/s National Productivity ….Respondent Counsel of India, Utpadakta Bhawan, 5-6 Institutional Area, Lodhi Road, New Delhi – 110 003. APPEARANCE: Shri Manoj Kumar, Authorized Representative for the Department Shri Jitendra Singh and Mayank Sharma, Advocates for the respondent. CORAM: HON’BLE DR. MS. RACHNA GUPTA, MEMBER (JUDICIAL) HON’BLE SHRI P.V. SUBBA RAO, MEMBER (TECHNICAL) FINAL ORDER NO. 50953/2025 DATE OF HEARING : 24.03.2025. DATE OF DECISION : 02.07.2025. P.V. SUBBA RAO Revenue filed this appeal to assail the order-in-original dated 25.9.2018 passed by the Commissioner1 deciding the proposals made in nine show cause notices2 issued to M/s. National Productivity Counsel of India3 covering the period 2006-2007 to 2015-2016. The impugned order confirmed service tax demand 1. impugned order 2. SCN 3. respondent 2 ST/50216 OF 2019 of Rs. 4,40,408/- out of the total demands of Rs. 4,42,75,052/- raised in the SCNs under section 73 of the Finance Act, 19944 and dropped the remaining part of the demand. It also imposed penalty of Rs. 4,40,408/- under section 78 of the Act and penalty of Rs. 10,000/- each under sections 77(1) and 77(2) of the Act on the respondent. 2. Revenue is aggrieved by the impugned order and filed this appeal with a prayer to determine whether the following were correct and legal: a) allowing reimbursable expenses at a standard rate instead of actual expenses and dropping the demand; b) allowing the admitted tax liability of the respondent under ‘consulting engineer service’ for FY 2011-12 against the service tax demand raised on reimbursable expenses; c) considering the service tax demand of FY 2014-15 for FY 2015-16 in his discussions at para 16.6; and d) accepting the amount of Rs. 1,53,00,000/- paid on 20.3.2015 (for the period 2006-07 to 2010-11) as having paid under protest when the letter of protest was given after more than two months It is prayed that the tribunal may remand the matter to the Commissioner to pass a de novo adjudication order after due verification and also to pass such further orders as this Tribunal may deem fit. 4. Act 3 ST/50216 OF 2019 Submissions on behalf of the Revenue 3. Shri Manoj Kumar, learned authorized representative for the Revenue made the following submissions: (i) The respondent was registered with the service tax department for providing ‘Consulting Engineer services’ and was paying service tax. It’s records were audited and it was found that the respondent had not paid or short paid service tax. Accordingly, SCNs dated 2.4.2012 and 12.10.2012 were issued covering the period 2006-2007 to 2010-2011 which were followed by seven periodical SCNs and all the nine SCNs were decided by the impugned order. (ii) After considering the submissions of the respondent, the Commissioner passed the impugned order. It was examined by the Committee of Chief Commissioners and it was felt that it was not legal and proper on three counts. (iii) The demand of service tax in the SCNs included reimbursable expenses collected by the respondent. In its reply to the SCNs, the respondent relied on the judgment of the Delhi High Court in Intercontinental Technocrats and Consultants5 in which it was held that no service tax could be charged on the reimbursable expenses. Revenue’s appeal against 5. 2013 (29) S.T.R. 9 (Del.) 4 ST/50216 OF 2019 Intercontinental Technocrats and Consultants was dismissed by the Supreme Court6. The Commissioner, however, erred in not ascertaining the exact value of such reimbursable expenses and instead allowing such expenses based on the standard rate of expenses claimed by the respondent for various programmes. (iv) SCNs dated 12.10.2012 and 19.10.2012 were issued covering the FY 2011-2012 based on best judgment assessment under section 72 of the Act. The Commissioner accepted the contention of the respondent that it had collected reimbursable expenses of Rs. 7,70,33,015/- and paid service tax of 79,34,401/- on these amounts for the period. This amount was paid for providing ‘consulting engineer services’ as per the ST-3 services. The Commissioner allowed adjustment of the service tax so paid by the respondent against the demand on reimbursable expenses without verification of records to arrive at the correct values independently. (v) The Commissioner also committed a grave error in holding that the amounts totalling Rs. 7,21,33,692/- during investigation as deposits paid under protest to buy peace of mind because the protest letter was issued only after two months. Submissions on behalf of the respondent. 6. 2018 (10) G.S.T.L. 401 (S.C.) 5 ST/50216 OF 2019 4. Learned counsel for the respondent vehemently supported the impugned order and submitted as follows: (i) The respondent is an autonomous institution under the Government of India to promote productivity in all sectors of Indian economy which it does this through, inter alia, conducting training programmes. It was therefore, registered with the service tax department and was paying service tax. (ii) For the training programmes, the respondent charged a consolidated fee covering not only training but also other reimbursable expenses such as board and lodging. It collected some amounts towards training and certain amount towards the reimbursable expenses. (iii) The Commissioner dropped the demand of service tax on the reimbursable expenses as held in Intercontinental Consultants and Technocrats. (iv) The impugned order is correct and proper and calls for no interference. Findings 5. We have considered the submissions advanced by both sides and perused the records. There is no dispute that as per Intercontinental Consultants reimbursable expenses cannot be charged to service tax and the demands need to be dropped to that extent. Revenue’s first submission is that the Commissioner had accepted the reimbursable expenses based on the norms followed by the Respondent without verifying the 6 ST/50216 OF 2019 actual amount of expenses incurred in each case and thereby erred in calculating the demand. Revenue did not produce before us any evidence to show that the actual expenses incurred by the respondent were less than what was allowed by the Commissioner. At times, the exact records are not available with an assessee to determine the tax liability. Section 72 of the Act provides for best judgment assessment by the assessing officer in such cases. The Commissioner adjudicating the SCNs also determined if the self-assessment of tax was correct or otherwise. Therefore, his best judgment based on the available figures needs to be accepted unless there is evidence to the contrary. In this case, we find no evidence to the contrary. 6. This legal position will be clear if we consider a contrary situation. If a service provider had not paid service tax at all and it emerged during investigation that it had rendered taxable services, service tax can be charged only if there is evidence that a taxable service was rendered and the value of the service so rendered is available. If Revenue cannot get hold of each and every invoice but is able to obtain aggregate values in the books of accounts or balance sheets, demand can only be raised based on the available figures and the best judgment of the officer. If every tax invoice is insisted upon, service tax cannot be confirmed if the invoices were not available. As it is with the tax, so is it with the deductions on account of reimbursable expenses. If there is no doubt that reimbursable expenses were incurred and amounts on that account were collected but the exact figures 7 ST/50216 OF 2019 are not available, the officer has to use his best judgment. It is evident that the exact figures were not available as otherwise Revenue would have provided the figures and proof before us. We, therefore, find no reason to interfere with the best judgment of the Commissioner with respect to the value of the reimbursable expenses incurred by the respondent. 7. Revenue’s second submission is that for the year 2011- 2012, SCNs were issued on the basis of best judgment assessment. The Commissioner accepted the respondent’s submission that it had incurred an amount of Rs. 7,70,33,015/- as reimbursable expenses and had paid service tax of Rs.79,34,401/- when, in fact, as per the ST-3 returns, the service tax was paid on ‘consulting engineer services’. The Commissioner has accordingly, computed the tax liability. We find that there is no separate service of ‘reimbursable expenses’. This expression means only such amounts which are collected along with the consideration for the taxable services rendered but which are actually reimbursements of certain expenses. Therefore, the service tax return would not show any tax as having been paid on reimbursable expenses but would show it as tax paid on a service. The service rendered by the respondent was classified as ‘consulting engineering service’ and the service tax was paid accordingly. The amounts collected for providing this service was taxable while any reimbursable expenses collected were not in view of Intercontinental Consultants. Therefore, the entire amount paid by the respondent as service tax should be 8 ST/50216 OF 2019 reckoned towards the taxable service. We find no error in the Commissioner doing so. 8. The last submission of the Revenue is that the respondent had paid certain amounts during the course of investigation but had given a letter of protest after two months after such payment. According to the Revenue, the Commissioner erred in considering the amounts so paid as deposits and adjusting them towards the confirmed demand. We find no force in this submission of the Revenue. Any amounts paid during investigation do not become service tax by themselves. They need to be appropriated towards confirmed demands in the adjudication order and if any amount paid is more than what is finally confirmed the assessee will be entitled to refund of the amount and vice versa. If no SCN is issued at all after investigation, then the assessee can claim refund of the amounts so paid. It is immaterial if the letter of protest was given before or while depositing the amounts or not at all given. 9. In view of the above, we find that the impugned order is correct and proper and calls for no interference. The appeal is dismissed and the impugned order is upheld. (Order pronounced in open court on 02/07/2025.) (DR. RACHNA GUPTA) MEMBER (JUDICIAL) (P.V. SUBBA RAO) MEMBER (TECHNICAL) PK "