2019 (2) TMI 1175 - AT - Service Tax

Valuation - services of providing security personnels to M/s BHEL, Haridwar - inclusion of cost of accommodation facility as provided by BHEL to CISF(the service provider) in assessable value - whether the free accommodation provided by the service recipient to the security personnels shall be consideration to be included in the gross value? - Extended period of limitation - Government undertaking / PSU. Held that - The consideration received against providing any service, i.e. as per explanation Section 67, is something which include any amount payable for taxable services provided or to be provided. The bare reading makes it clear that in case any amount is payable qua to CISF the accommodation being provided to the security personnels that it shall be the consideration. If it is consideration, then only Rule 3 Value of Determination rules will come into picture - there is no evidence on the point about any amount either in terms of HRA was ever paid to the respondent/CISF, the question of notional value of the free accommodation provided cannot form the part of the gross value which has to be taxed under Section 67 of the Act. Time Limitation - Held that - The period of demand herein is w.e.f. April 2009 to June 2012. SCN is issued on 09.09.2014. It is clear that the entire period of demand is beyond the normal period of one year. The service provider herein is Government undertaking. Service recipient is also a public sector undertaking. There cannot be a single good reason for either of the two to have an intent to evade the tax. there is otherwise no evidence by the Department to prove any positive act on part of the service provider which may amount as mensrea on the part of the provider to evade tax - The Department had no occasion to provisio to Section 73 of the Finance Act, 1994 for invoking the extended period of limitation - SCN is hit by the principle of limitation. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Interpretation of Section 67 of the Finance Act, 1994 and Rule 3 of Service Tax Determination of Value Rules.
2. Consideration of free accommodation provided in the taxable value of services.
3. Application of limitation period for demand of service tax.

Analysis:

1. The primary issue in this case revolves around the interpretation of Section 67 of the Finance Act, 1994, and Rule 3 of Service Tax Determination of Value Rules. The Department contended that the cost of accommodation provided by BHEL to CISF should be included in the taxable value of services, as per Rule 3. However, the Commissioner(Appeals) set aside the demand, leading to the appeal before the Tribunal.

2. The consideration of free accommodation provided by the service recipient to the security personnel was a crucial point of contention. The Department argued that the accommodation should be considered as part of the gross value for taxation purposes. On the other hand, the respondent relied on a precedent to assert that since no amount was paid for the accommodation, there was no liability on the service provider for its value. The Tribunal analyzed the provisions of Section 67 and Rule 3 to determine the taxability of the accommodation.

3. The issue of the limitation period for the demand of service tax was also addressed by the Tribunal. The demand in question pertained to the period from April 2009 to June 2012, with the SCN issued in 2014. The Tribunal noted that the demand period exceeded the normal one-year limitation. Considering the nature of the service provider and recipient as government undertakings, and the absence of evidence indicating intent to evade tax, the Tribunal concluded that there was no basis for invoking the extended period of limitation under Section 73 of the Finance Act, 1994. Therefore, the Tribunal held that the SCN was barred by limitation.

In conclusion, the Tribunal dismissed the appeal, upholding the Order of the Commissioner(Appeals) and finding no infirmity in the decision. The judgment provides a detailed analysis of the legal provisions governing the valuation of taxable services, the consideration of non-monetary aspects in service tax determination, and the application of limitation periods in tax demands.