2018 (5) TMI 214 - AT - Service Tax

Valuation of taxable services - Security Agency Services - Section 67 of the Finance Act, 1994 - inclusion of expenditures incurred in providing the said service - Held that - reliance placed in the case of SECURITY AGENCIES ASSOCIATION Versus UNION OF INDIA 2013 (2) TMI 356 - KERALA HIGH COURT , where it was held that the service providers are very much authorised and entitled to pass on the liability towards salary and statutory payments to the Service Receivers by raising the Bills including such amounts payable as Service tax. Penalty u/s 76 and 78 - Held that - penalty u/s 76 set aside following the case of Raval Trading Co. vs CST 2016 (2) TMI 172 - GUJARAT HIGH COURT , where it was held that simultaneous penalty cannot be levied u/s 76 and 78. Appeal allowed in part.

Summary

Issues:
1. Dispute over the value of taxable services provided by the appellant.
2. Imposition of penalties under Section 76 and 78 of the Finance Act, 1994.

Analysis:
1. The appellant, a Security Service Agency, failed to pay service tax amounting to ?14,91,466 for services provided from 2001 to 2005. The appellant contested the assessable value of the taxable service, arguing that certain expenditures should be excluded. However, the tribunal upheld the department's determination, citing precedents like the Kerala High Court judgment on Security Agencies and Rajasthan Ex-Servicemen Ltd. vs CCE Jaipur-I. The tribunal found no merit in the appellant's contention regarding the taxable value, affirming the applicability of service tax on the gross amount received from customers as per Section 67 of the Finance Act, 1994.

2. While there was no dispute on the applicability of service tax, the tribunal noted that penalties under both Section 76 and 78 of the Finance Act, 1994 were imposed by the authorities below. The tribunal referred to the principle of law established by the Gujarat High Court in Raval Trading Co. vs CST, which held that imposing penalties under both sections simultaneously is not in accordance with legal principles. Consequently, the tribunal set aside the penalty imposed under Section 76, modifying the impugned order. The appeal was partly allowed on this ground.

In conclusion, the tribunal upheld the determination of the taxable value of services provided by the appellant but set aside the penalty imposed under Section 76, aligning with the legal precedent established by the Gujarat High Court.