2024 (6) TMI 910 - AT - Service Tax

Valuation - inclusion of value of free supplies in the assessable value - Section 67 of Finance Act, 1994 - HELD THAT - The Airport Authority has provided certain non-monetary facilities which include barrack accommodation, medical expenses, lease accommodation, telephone charges, vehicle and vehicle hiring charges, stationary, dog squad expenses, miscellaneous expenses etc. to M/s. Central Industrial Security Force. This issue of inclusion of value of non-monetary benefits in the taxable value under Section 67 of Finance Act, 1994 is no longer res-integra as this Tribunal in 2024 (4) TMI 391 - CESTAT AHMEDABAD has already decided the matter in favor of the appellant i.e. M/s. Central Industrial Security Force. As the issue has already been decided in the above decision of this bench that the service tax demand on the value of non-monetary facilities extended to M/s. Central Industrial Security Force are not taxable, the order-in-original in this regard is set aside. So far as department s appeal is concerned, since the demand of service tax is not sustainable in this case, the question of imposing penalties under Section 76, 77 and 78 of the Finance Act, 1994 does not arise. As a result, the appeal filed by M/s. Central Industrial Security Force succeeds and the same is allowed - appeal of Revenue dismissed.

Summary

Issues:
1. Whether the value of non-monetary benefits provided by the service recipient should be included in the taxable value for service tax calculation.
2. Whether penalties under Section 76, 77, and 78 of the Finance Act, 1994 should be imposed in case of non-inclusion of non-monetary benefits in the taxable value.

Analysis:

Issue 1:
The case involved a dispute regarding the inclusion of non-monetary benefits provided by the service recipient in the taxable value for service tax calculation. The appellant, M/s. Central Industrial Security Force, received certain non-monetary facilities from the Airport Authority, which included various services such as barrack accommodation, medical expenses, lease accommodation, telephone charges, vehicle hiring charges, stationary, dog squad expenses, and miscellaneous expenses. The department contended that the value of these free supplies should have been included in the taxable value under Section 67 of the Finance Act, 1994. However, the Tribunal referred to previous decisions where it was established that expenses incurred towards medical services, vehicles, accommodation, and other similar facilities provided to the service provider were not includible in the taxable value for service tax calculation. The Tribunal relied on various judgments to support its decision, ultimately setting aside the order-in-original that demanded service tax on the value of non-monetary facilities extended to M/s. Central Industrial Security Force.

Issue 2:
The second issue revolved around the imposition of penalties under Section 76, 77, and 78 of the Finance Act, 1994 due to the non-inclusion of non-monetary benefits in the taxable value. The Tribunal, after determining that the demand of service tax on the non-monetary facilities was not sustainable, concluded that there was no legal basis for imposing penalties under the aforementioned sections. The Tribunal found no legal infirmity in the order-in-original regarding the imposition of penalties, as it had already established that the demand for service tax on non-monetary benefits was not valid. Consequently, the Tribunal allowed the appeal filed by M/s. Central Industrial Security Force, dismissed the department's appeal, and disposed of the cross-objection filed by the party accordingly.

In conclusion, the Appellate Tribunal CESTAT AHMEDABAD, in its judgment delivered by Hon'ble Mr. Ramesh Nair and Hon'ble Mr. C.L. Mahar, ruled in favor of M/s. Central Industrial Security Force, holding that the value of non-monetary benefits provided by the service recipient should not be included in the taxable value for service tax calculation. The Tribunal also determined that penalties under Section 76, 77, and 78 of the Finance Act, 1994 were not applicable in this case due to the non-sustainability of the service tax demand on non-monetary facilities. The decision set aside the order-in-original and allowed the appeal of M/s. Central Industrial Security Force while dismissing the department's appeal.