2010 (12) TMI 89 - AT - Service Tax

Investigation - classification - Held that - The appellants were clearly providing insurance auxiliary services to their clients who are insurance companies. The same cannot be categorized as security services by any stretch of imagination. The lower appellate authority brands the services provided by the appellants as security service because of a single word investigation appearing in the contract. He has failed to appreciate that investigation has various shades of meaning and investigation in the context of insurance claims cannot make the service provided by the appellants into security services

Summary

Issues involved: Classification of services under Security Agency Service or Insurance Auxiliary Services, Exclusion of reimbursement of out-of-pocket expenses from service tax valuation, Claim of abatement

Classification of services under Security Agency Service or Insurance Auxiliary Services:
The lower appellate authority initially classified the services provided by the appellants as security services based on the presence of the word "investigation" in the contract. However, the Tribunal disagreed, emphasizing that the lower authority did not properly consider the nature of the services. The Tribunal noted that the services were actually insurance auxiliary services for insurance companies, not security services. They highlighted that the term "investigation" had different meanings, and in the context of insurance claims, it did not transform the services into security services. Consequently, the Tribunal ordered the reclassification of the services under insurance auxiliary services.

Exclusion of reimbursement of out-of-pocket expenses from service tax valuation:
The lower appellate authority also addressed the exclusion of reimbursement of out-of-pocket expenses from the value for charging service tax. The authority found that the appellant failed to provide evidence of incurring such expenses. However, the Tribunal observed that the lower authority did not pass a detailed order, did not address the points raised by the appellants, and did not consider the issue adequately. The Tribunal directed the appellants to present all documentary evidence related to the claim of abatement before the original authority. Consequently, the Tribunal allowed the appeal by remanding the case to the original authority for a thorough consideration of the abatement claim based on the evidence to be submitted.

Claim of abatement:
The Tribunal addressed the claim of abatement in the context of the service tax valuation. The appellants undertook to provide all necessary documentary evidence supporting their claim before the original authority. Following the decision to reclassify the services and the lack of evidence submission, the Tribunal allowed the appeal by remanding it to the original authority. The original authority was instructed to provide a fair hearing to the appellants and evaluate their abatement claim based on the documentary evidence to be submitted. As a result, the appeal was allowed by way of remand, and the stay petition was also granted.

This detailed analysis of the judgment highlights the key issues of classification of services, exclusion of expenses from service tax valuation, and the claim of abatement, providing a comprehensive overview of the Tribunal's decision and the reasoning behind it.