2024 (4) TMI 391 - AT - Service Tax

Valuation of service - Security Agency Service - non-inclusion of value of certain facilities extended by M/s. Reliance Industries Limited such as charges for accommodation, medical expenses, vehicle running and maintenance, telephone, dog squad etc. in assessable value - HELD THAT - The matter is no longer res-integra as this Tribunal in the case of M/S BHARAT COKING COAL LTD. VERSUS COMMR. OF CENTRAL EXCISE S. TAX, DHANBAD 2021 (9) TMI 23 - CESTAT KOLKATA has decided the same issue pertaining to the appellant and held that The Allahabad Bench of the Tribunal in the case of CENTRAL INDUSTRIAL SECURITY FORCE VERSUS COMMISSIONER OF CUSTOMS, C.E. S.T., ALLAHABAD 2019 (1) TMI 1661 - CESTAT ALLAHABAD , has already settled the issue in favour of the appellant to hold that expenses incurred towards medical Services, vehicles, expenditure on Dog Squad, stationery expenses, telephone charges, expenditure incurred by the service recipient for accommodation provided to CISF etc are not includible. The impugned order-in-original is without any merit therefore, set aside - appeal allowed.

Summary

Issues involved:
The issues involved in this case are the correct calculation of service tax liability on the cost of deployment of forces by an Armed Force of Union of India providing security services to industrial undertakings, specifically regarding the inclusion of certain facilities extended by the service recipient in the taxable value.

Details of the Judgment:
1. The appellant, an Armed Force of Union of India, is registered under Security Agency Service and has been discharging service tax liability on the cost of deployment of its forces for providing security services to industrial units. The dispute arose when the department contended that certain facilities provided by the service recipient, such as charges for accommodation, medical expenses, vehicle running, and maintenance, were not included in the taxable value for providing security services.

2. The department, in the absence of the value of certain facilities, calculated the value of the free services at 25% of the cost of deployment using the best judgment method u/s 72 of the Finance Act, 1994. A show cause notice was issued demanding service tax, interest, and penalties. The matter was adjudicated, confirming all charges in the show cause notice.

3. The Tribunal referred to a previous decision regarding a similar issue involving reimbursement of expenses to CISF for medical & telephone facilities, imprest expenses, rent-free accommodation, rented vehicles, etc. It was held that such expenses are not includible in the assessable value for service tax payment on a reverse charge basis. The Tribunal also noted that there was no case of fraud or suppression to justify the extended period of limitation invoked by the department.

4. Relying on the precedent and finding the impugned order without merit, the Tribunal set aside the order-in-original and allowed the appeal, providing consequential relief to the appellant.

Conclusion:
The Tribunal's decision clarified the scope of taxable value for service tax calculation in cases where certain facilities provided by the service recipient are not included. The judgment emphasized the importance of legal precedent and specific arrangements between parties in determining service tax liability.