2015 (1) TMI 1000 - AT - Service Tax

Waiver of pre deposit - Security agency service - Penalty u/s 77 & 78 - Held that - Joint Commissioner himself has accepted that there were amounts collected under cleaning, driver and gardening charges. He has also listed some cases where service tax had been collected by the appellants. However, in the absence of the verification with the customers as to whether these charges were in reality for providing security services, the claim of the learned Chartered Accountant that these services cannot be classified under security services prima facie has to be accepted. Nevertheless, in the absence of any detailed explanation and further in the absence of evidence to show that all the amounts on which service tax has been demanded related to driving/cleaning/gardening charges, it may not be said that the appellants have made out a prima facie case. Moreover admittedly in respect of certain invoices, service tax has been collected on these aspects also. Under these circumstances, it is felt that the appellants are required to be put to terms for hearing the appeal - Partial stay granted.

Summary

Issues:
1. Discrepancy in income from security services between Profit & Loss Account and ST3 returns.
2. Demand for service tax, interest, and penalties for the years 2003-04 and 2004-05.
3. Classification of charges under drivers, cleaning, and gardening as security charges.
4. Verification of service tax collection on various charges.
5. Financial difficulties faced by the appellant.

Analysis:
1. The appellant, engaged in security services, faced a demand for service tax due to a mismatch between income figures in the Profit & Loss Account and ST3 returns. The discrepancy led to the initiation of proceedings for demanding service tax of &8377; 14,15,764/- for the years 2003-04 and 2004-05, along with interest and penalties under Section 77 & 78.

2. The appellant's Chartered Accountant argued that the excess receipts were not solely from security services but also included charges for drivers, cleaning, and gardening. Despite the acknowledgment by the adjudicating authority that these charges were collected under separate heads, the demand for service tax was upheld. It was revealed that service tax was inadvertently included in charges during 2004-05.

3. The Respondent contended that the charges for drivers, cleaning, and gardening were categorized as security services in the Profit & Loss account, justifying the demand for service tax. However, the Chartered Accountant argued that these charges were not exclusively for security services and that service tax was not collected on them.

4. The Tribunal acknowledged that some charges were indeed collected under drivers, cleaning, and gardening heads. However, without customer verification on the nature of these charges, it was deemed appropriate to allow the appeal hearing. The appellant was directed to deposit &8377; 3 lakhs within eight weeks, with a stay on recovery during the appeal's pendency, provided compliance was reported by a specified date.

5. Considering the financial difficulties faced by the appellant, including outstanding dues from customers affecting staff salaries, the Tribunal granted a waiver on the predeposit of the balance dues upon the initial deposit of &8377; 3 lakhs. The decision aimed to balance the appellant's financial constraints with the requirements of the case, ensuring a fair hearing and resolution of the service tax dispute.