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2013 (2) TMI 51 - HC - Service TaxNon deposit of service tax - Held that - The liability to pay service tax was to be determined on the gross amount charged by the appellant from its client for services rendered in connection with security and, that having been done, there is no scope of interference. In the event, tax determined is paid within a period of one month from today, no penalty shall be levied, inasmuch as, appellant was genuinely confused having regard to imposition of obligation upon it to pay the minimum wages to the personnel hired by it.
Issues: Interpretation of taxing statute regarding service tax liability based on gross amount charged by the agency for security services.
In this judgment by the High Court, the appellant's appeal was dismissed by the Tribunal due to failure to deposit the service tax levied on it. The appellant argued that the gross amount charged should exclude the amount paid to security personnel as per the tender stipulation by BSNL. However, the Court emphasized that in interpreting a taxing statute, one must consider the words used by the statute, which in this case referred to "the gross amount charged by such agency from the client for services rendered in connection with security." The Court held that the gross amount charged by the appellant from its client for security services, including payments to hired personnel, was subject to taxation without any provision for deduction. The Court clarified that service tax is not considered a value addition, but a requirement for providing service, and thus, the liability to pay service tax was based on the total gross amount charged by the appellant. Furthermore, the Court noted that if the tax determined is paid within a month from the judgment date, no penalty shall be levied, considering the appellant's genuine confusion regarding the obligation to pay minimum wages to hired personnel. Ultimately, the appeal was disposed of in accordance with the Court's interpretation of the taxing statute and the appellant's liability to pay service tax on the gross amount charged for security services.
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