2024 (4) TMI 673 - AT - Service Tax

Recovery of short paid service tax alongwith interest and penalty - Valuation of Security Agency Service - inclusion of various charges like, accommodation, vehicle running and maintenance, Telephone, Stationary and other expenses, in the gross value for calculation of service tax liability - HELD THAT - The principal Bench of the Tribunal recently in the case of SR. COMMANDANT CENTRAL INDUSTRIAL SECURITY FORCE (BHEL UNIT) BHARAT HEAVY ELECTRICALS LTD. VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE 2023 (4) TMI 608 - CESTAT NEW DELHI while relying upon the another decision of the 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 held that 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. There are no reason to differ from those findings. Findings otherwise stands acknowledged by the Department itself. Resultantly, the order under challenge has been wrongly confirmed the impugned demand in total ignorance of the above said decisions - the impugned order set aside - appeal allowed.

Summary

Issues involved:
The issues in this case involve the liability of a Security Agency Service provider to pay service tax on various charges paid by the service receiver directly to third parties on the appellant's behalf, and whether the term 'person' in the definition of Security Services includes the State and its instrumentalities, thus exempting them from service tax.

Summary:

Liability for Service Tax on Various Charges:
The appellant, a Security Agency Service provider, was found to have not paid service tax on charges like accommodation, vehicle running and maintenance, telephone, stationary, and other expenses paid by the service receiver directly to third parties on the appellant's behalf. The Department claimed a short payment of service tax amounting to Rs. 5,38,759 and issued a show cause notice for recovery. The order confirming the demand was set aside by the Tribunal based on previous decisions that expenses like medical services, vehicles, dog squad, stationery, telephone charges, and accommodation provided to security personnel are not includible in the taxable value for service tax calculation.

Interpretation of 'Person' in Security Services Definition:
The appellant argued that as a State instrumentality, they are not liable to pay service tax as the term 'person' in the definition of Security Services does not include the State and its instrumentalities. Citing a previous decision in a similar case, the appellant sought to set aside the order and have the appeal allowed. The Department acknowledged that the issue had been decided in favor of the Assessee in previous cases.

Final Decision:
After considering the arguments and the previous decisions cited by the appellant, the Tribunal found no reason to differ from the established findings. The order confirming the demand was set aside as it ignored the previous decisions that expenses like accommodation provided to security personnel are not includible in the taxable value. Therefore, the appeal was allowed in favor of the appellant.

Note: Separate judgment was not delivered by the judges in this case.