2018 (3) TMI 1246 - AT - Service Tax

Valuation - includibility - the cost towards PF. ESI and salary in the gross value - extended period of limitation - penalty - Held that - the issue with regard to payment of Service Tax on the salary including PF and ESI of the personnel were held to be taxable by the Tribunal in the case of the appellant itself Patron Detective & Security Services Versus C.C.E., Jaipur 2014 (1) TMI 1835 - CESTAT, NEW DELHI , where the Tribunal has dismissed the appeals filed by the appellant, holding that it is liable to pay Service Tax on the salary PF and ESI paid to its personnel for providing the security service. Since the present show cause notices were issued on 15/09/2008 and 21/08/2009, in respect of the period 2002-2007 and 2007 to 2008 respectively, A part of the adjudged demand is barred by limitation of time, having not been issued within stipulated time frame of one year from the relevant date. Penalty - Held that - the issue with regard to inculdibilty of the cost towards PF, ESI and salary in the gross value was highly contentious and there were divergent view by the Judicial forums - the provisions of Section 80 ibid in the case can be invoked for non-imposition of penalty under Section 76, 77 and 78 ibid - penalty set aside. Appeal allowed in part.

Summary

Issues involved:
Appeal against impugned order dated 30/12/2010 and 02/10/2011 - Bar on limitation of time for show cause proceedings - Waiver of penalties under Section 76, 77, and 78 of the Finance Act, 1994 - Taxability of Service Tax on salary including PF and ESI - Applicability of Section 80 for penalty imposition.

Analysis:
The appellant did not contest the case on merits but argued that the show cause proceedings initiated by the Department were time-barred and requested for the waiver of penalties under specific sections of the Finance Act, 1994. The Tribunal noted that a previous order held the salary, PF, and ESI of personnel as taxable for providing security services. However, the Tribunal found that the present show cause notices were issued beyond the stipulated time frame, rendering part of the demand time-barred. Consequently, the adjudged demand of Service Tax beyond the limitation period could not be sustained. Additionally, the matter of including PF, ESI, and salary in the gross value was contentious with divergent views by judicial forums. The Tribunal concluded that Section 80 of the Finance Act could be invoked to waive penalties under Sections 76, 77, and 78. Therefore, the impugned order confirming penalties under those provisions was set aside.

The Tribunal allowed the appeals to the extent of Service Tax demand confirmed beyond the normal period of limitation and waived the penalties as per Section 80 of the Finance Act. The appeals were disposed of accordingly, with the impugned orders being set aside.