2018 (8) TMI 820 - AT - Service Tax

Security agency services - amount recovered as reimbursement from the sister concerns - Man power supply Service - repair & maintenance service - Held that - Few records were shown which indicates that appellant has not charged any amount in addition to the proportionate actual salaries and wages and other expenses related to the personnel deployed by them. In the absence of any contrary evidence, it is held that the respondent has a case in their favor - demand set aside. Refund claim - amount deposited by the Respondent-assessee in the investigations carried out - Unjust Enrichment - Held that - The first appellate authority has correctly recorded that the respondent herein had filed various declarations from the parties concerned that the said amount was not reimbursed by them to Usha Kiran Movies Limited. Such categorical finding of the fact has not been disputed by Revenue in their grounds of appeal - It is noticed that there is no dispute as to the fact that the respondent herein has not been reimbursed of the amount deposited by the group companies - Since in the case in hand, the respondent herein had furnished declarations from the parties/group companies/sister concerns to whom allegedly the incidence of duty is passed on, refund is to be allowed - refund allowed. Refund claim - amount paid to M/s Usha Kiran Movies Limited, consequent to the adjudication that took place - unjust enrichment - Held that - It is noticed from the records that the respondents herein had filed Chartered Accountant s certificate dated 26.03.2009 before the lower authorities. It transpires from the records that the department had appointed Director (Cost) for looking into the claim of these respondent and the said Director (Cost) vide his report stated that the respondent herein had borne the amount charged by Usha Kiran Movies Limited - respondent herein are entitled for the refund of the amounts which have been collected from them by Usha Kiran Movies Limited as correctly held by the adjudicating authority - refund allowed. Appeal dismissed - decided against Revenue.

Issues Involved:
1. Tax liability on security agency services.
2. Tax liability on maintenance & repair services and manpower supply services.
3. Refund claims related to tax payments made during investigations.
4. Unjust enrichment in refund claims.

Detailed Analysis:

A) Appeal Nos. ST/557/2008 and ST/558/2008:

Issue 1: Tax Liability on Security Agency Services

The Revenue alleged that Usha Kiran Movies Limited provided security agency services to sister concerns within Ramoji Film City without paying service tax from 01.04.2001 to 31.08.2005. The Revenue contended that the amount received as reimbursement of salaries for security personnel was taxable under security agency services.

Issue 2: Tax Liability on Maintenance & Repair Services and Manpower Supply Services

The Revenue also argued that Usha Kiran Movies Limited supplied manpower and provided maintenance and repair services from 16.06.2005 to 31.12.2005, which should be taxed under the respective service categories.

Findings:

The Tribunal found that Usha Kiran Movies Limited maintained its own property and infrastructure, sharing costs with sister concerns proportionate to their usage. The company did not charge extra beyond actual expenses. Relying on the High Court of Gujarat's decision in Commissioner of Service Tax vs. Arvind Mills Limited, the Tribunal concluded that the activities did not constitute taxable services. The appeals by the Revenue were rejected, upholding the first appellate authority's decision.

B) Appeal No. ST/680/2009:

Issue 3: Refund Claims Related to Tax Payments Made During Investigations

Usha Kiran Movies Limited filed a refund claim after a favorable order in Appeal No. ST/557/2008. The adjudicating authority initially rejected the claim on the grounds of unjust enrichment, as the amount was recorded as an expenditure. However, the first appellate authority allowed the refund, noting that the amount was not reimbursed by sister concerns.

Findings:

The Tribunal upheld the first appellate authority's decision, noting that the amount paid during the investigation was a deposit, not a tax liability. The declarations from sister concerns confirmed that the amount was not reimbursed, thus passing the test of unjust enrichment. The appeal by the Revenue was rejected.

C) Appeal Nos. ST/246-256/2011:

Issue 4: Unjust Enrichment in Refund Claims

Various sister concerns of Usha Kiran Movies Limited filed refund claims for amounts paid to Usha Kiran Movies Limited, which were collected for shared expenses. The adjudicating authority sanctioned the refunds, but the first appellate authority set aside the order, citing failure to pass the unjust enrichment test.

Findings:

The Tribunal found that the Chartered Accountant's certificate and the Director (Cost) report confirmed that the appellants bore the service tax amount. The first appellate authority's dismissal of the Chartered Accountant's certificate was unwarranted. The Tribunal concluded that the appellants were entitled to refunds, setting aside the first appellate authority's order.

Conclusion:

All appeals were disposed of as indicated, with the Tribunal upholding the first appellate authority's decisions in favor of Usha Kiran Movies Limited and its sister concerns, rejecting the Revenue's contentions on tax liabilities and unjust enrichment. The Tribunal's findings were based on substantial evidence and legal precedents, ensuring that the appellants were not unjustly enriched and were entitled to refunds for the amounts paid.

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