2018 (6) TMI 1769 - AT - Service Tax

Levy of Service Tax - Watch and Ward services provided to Metro Railways - security agency or not - period March 01 to May 05 - HELD THAT - The Appellant have been providing services related to security, manpower supply for cleaning, washing, sweeping, gardening, upkeep, watch and guard, grass cutting, checking, watch and ward, mechanized cleaning, driving , office assistance etc. The services provided by the said appellant are classifiable under two categories viz. Security Agency Service and Manpower Recruitment or Supply Agency s service. They are rendering security service to their clients. The service was made taxable under the category of security Agency w.e.f. 16.10.98 vide clause 94 of Section 65 of chapter v of the Finance Act, 1994. It is found from the impugned order that the Adjudicating Authority has observed that their functions cannot be restricted to checking of tickets of the passengers only. The personnel deployed by them must have done the overall supervision of passengers including watching the property of Metro Railway and watching that any passenger cannot make any damage to any property. The personnel deployed must have under taken the job related to security of Metro property. They are also to ensure smooth movement of passengers in the Metro Station - the services provided by the appellant to Metro Railway, Kolkata surely falls under the category of Security Agency Service. The appellant has argued that for non-taxable services, section 11D of Central Excise Act, 1944 has no application. They have also mentioned that Section 73A of the Finance Act, 1994 has been introduced w.e.f 18.04.06 and that according to sub-section(2) of Section 73A, service tax collected on non taxable service is demandable/payable to Government exchequer. This provision is only applicable w.e.f 18.04.06.During the material period the provision of Section 11D of the Central Excise Act, 1944 was applicable. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Demand of service tax, interest, and penalty
2. Classification of services provided
3. Applicability of Section 11D
4. Imposition of penalties under sections 76 and 78
5. Limitation period for initiating proceedings

Analysis:

1. Demand of service tax, interest, and penalty:
The appellant, engaged in providing various services, received a Show Cause Notice demanding service tax, interest, and penalty. The Adjudicating Authority confirmed the demand of service tax along with interest and imposed penalties under sections 76 and 78 of the Finance Act 1994. The appellant contested the demand before the Tribunal.

2. Classification of services provided:
The appellant's services included security, manpower supply, cleaning, washing, sweeping, gardening, and more. The issue arose regarding the classification of "Watch and Ward" services provided to Metro Railways. The appellant argued that these services did not fall under taxable services as defined in the Finance Act, 1994. However, the Tribunal found that the services provided by the appellant to Metro Railways indeed fell under the category of "Security Agency Service."

3. Applicability of Section 11D:
The appellant raised concerns regarding the applicability of Section 11D, contending that it was not applicable to non-taxable or exempted services. They argued that insufficient evidence was provided to show that service tax had been collected. The Tribunal noted the arguments but upheld the applicability of Section 11D during the relevant period.

4. Imposition of penalties under sections 76 and 78:
The appellant challenged the imposition of penalties under sections 76 and 78, claiming that the order was prepared hastily. However, the Tribunal found no grounds to overturn the penalties imposed by the Adjudicating Authority.

5. Limitation period for initiating proceedings:
The appellant also raised the issue of the limitation period for initiating proceedings, arguing that the Show Cause Notice was time-barred. They cited case laws to support their contention. However, the Tribunal found that the proceedings were initiated within the prescribed time limit and rejected the appellant's argument.

In conclusion, the Tribunal upheld the impugned order, confirming the demand of service tax, interest, and penalties imposed on the appellant. The appeal filed by the appellant was rejected, and the order was sustained based on the detailed analysis of the issues raised during the proceedings.