2013 (8) TMI 147 - AT - Service Tax

Manpower Recruitment agency service - Valuation - inclusion of value of Provident Fund and other statutory dues - Assessee was engaged in providing the taxable man-power recruitment or supply agency service and had received a total amount of ₹ 3,47,481/- towards the provident fund contribution in respect of personnel deployed by the assessee to M/s Hindalco Industries Ltd Held that - It is admitted that the liability to remit Provident Fund to Provident Fund Authorities is a statutory liability on the appellant, the an employer of persons who were deployed to serve the needs of M/s Hindalco Industries Ltd., towards the taxable manpower recruitment or supply agency service. M/s Hindalco consideration for such taxable service provided by the appellant had remitted to the appellant not only the amount agreed to between the parties for remunerating the personnel so deployed but also the amount of provident fund payable by the appellant to Provident Fund authorities, in terms of the appellant s statutory obligation. Both these amounts therefore constitute the gross amount charged by the appellant for the taxable service provided to M/s Hindalco Industries Ltd., since the taxable service was provided for a consideration in money. Both these amounts therefore constitute the gross amount charged by the appellant for having provided the taxable service Appeal is dismissed Decided against the Assessee.

Summary

Issues:
Service tax demand confirmation, Valuation of taxable service for charging service tax, Statutory liability for Provident Fund remittance

Service tax demand confirmation:
The Assistant Commissioner confirmed a service tax demand of Rs.41,037/- along with interest and penalties. The appellant's appeal was rejected by the Commissioner (Appeals), leading to the current appeal. The appellant failed to deposit service tax related to provident fund contributions received from a company for providing taxable man-power recruitment services. The contention was that since the provident fund contribution was separately paid by the company and not part of payments for the taxable service, it should not be included in the taxable value for tax computation.

Valuation of taxable service for charging service tax:
The appellant argued that as per a High Court decision, the value of a taxable service should only include the gross value received for providing the service, not any additional amounts. However, the Tribunal noted that this principle was not dispositive in the current case. The relevant sections of the Act were discussed, highlighting that the taxable value is the gross amount charged for the service provided.

Statutory liability for Provident Fund remittance:
It was acknowledged that the appellant had a statutory liability to remit Provident Fund contributions. The Tribunal found that the amounts received from the company, including the provident fund contributions, constituted the gross amount charged by the appellant for providing the taxable service. As both amounts were part of the consideration in money for the service provided, the appeal was dismissed based on the concurrent findings of the adjudicating authority and the appellate Commissioner.

This judgment clarifies the valuation of taxable services for charging service tax and affirms that statutory liabilities, such as Provident Fund remittances, form part of the consideration for taxable services. The decision emphasizes that the gross amount charged for the service provided includes all amounts received, even if they are not directly linked to the service payment.