2015 (8) TMI 504 - AT - Service Tax

Demand of service tax - appellant is engaged in providing security services and also other services like cleaning services, services to SEZ units and some non-taxable services - difference in gross value of taxable service as shown in ST-3 returns, as compared to turnover as per Books of Account. - held that - Other than security services, the appellant also provided services like caretaking services, driving services, loading and unloading services, fire fighting services which are not covered in any category of taxable services. As per certificate of the C.a. produced by the appellant before the court below as well as this Tribunal, the total value of such services is ₹ 40,00,99,350/- for the disputed period. - no specific head of service category has been proposed in the show-cause notice nor confirmed in the impugned order - Thus, the show-cause notice as well as the impugned order are vague. As regards classification, it is settled law that classification of taxable service must be specified in the show-cause notice in order to fasten liability of Service Tax. - appellant is not liable to Service Tax in respect of the non-taxable services, the gross value of which totals ₹ 40,00,09,350/- and accordingly, the demand of ₹ 4,12,00,963/- is set aside. In respect of cleaning services , the same have been provided by the appellant to various organizations including Govt. Hospitals, Govt. Educational Institutions, Horticulture, Agriculture, Housing Societies etc. - appellant have paid Service Tax suo motu even before the issue of show-cause notice on the value of cleaning services provided to Private Hospitals, Private Educational Institutions, Charitable Hospital and Institutions considering the value of the same as inclusive of Service Tax amounting to ₹ 19,20,285/-. - demand of ₹ 2,94,55,469/- towards cleaning services is erroneous and is accordingly set aside. Even in the earlier period out of 7 SEZ units (under dispute) except Punj Lloyd and Glenmark Pharma, services have been provided to these SEZ units and based on the certificate from the Chartered accountant, exemption was allowed to the appellant. In the present case also, the certificate of chartered Accountant is available on record and the same was filed before the adjudicating authority also, which is evident from the impugned order. The certificate certifies that the security services valued at ₹ 31,97,986/- was provided to Punj Lloyd under the head, services provided to SEZ units during 2011-12. Thus, it is evident that the appellant have provided services to the SEZ units and accordingly the demand of ₹ 30,68,290/- attributable on this account is set aside. So far the issue of difference in value of services as per ST-3 returns and balance-sheet due to introduction in point of Taxation Rules, 2011 w.e.f. 1.4.2011, the liability to discharge Service Tax was shifted from the receipt basis to accrual basis. It is evident that the liability on accrual basis has been discharged, on the difference in the value of the services for the prior period also and therefore, the same were not included in the gross value, determined for ST-3 returns for 2011-12. So far the issue of reimbursement of expenses which have been taxed, it is seen that the appellant have voluntarily deposited ₹ 31,37,207/- out of the total demand on this count as ₹ 34,64,339/- prior to issue of show-cause notice. This small difference of about 10% being ₹ 3,23,132/- remains, which is attributable to erroneous computation by Revenue by considering the gross value of service as exclusive of Service Tax instead of considering the same as inclusive of Service Tax. It is also taken notice that for earlier period, order dated 12.11.2012 in the appellant s own case, the adjudicating authority has accepted and correctly held that the value of service shall be considered as inclusive of Service Tax. - Decided in favour of assessee.

Issues Involved:
1. Claimed as Non-Taxable Services
2. Cleaning Services
3. Services provided to SEZ units
4. Difference in Value of Services as per ST-3 returns & Balance Sheet due to Point of Taxation Rules, 2011 (POTR)
5. Reimbursement of expenses

Detailed Analysis:

1. Claimed as Non-Taxable Services:
The appellant argued that the services provided, such as caretaking, driving, loading, unloading, and firefighting, do not fall under any taxable category. The Tribunal noted that the show-cause notice and impugned order did not specify the service category, making the demand vague. The Tribunal referenced an earlier Order-in-Original dated 12.11.2012, which had dropped similar demands. Consequently, the demand of Rs. 4,12,00,963/- was set aside.

2. Cleaning Services:
The appellant provided cleaning services to various organizations, including government hospitals and educational institutions. The Tribunal observed that cleaning services provided to non-commercial organizations are excluded from taxable services under Section 65(24g) of the Act. The Tribunal also noted that the appellant had already paid the service tax on cleaning services provided to private hospitals and educational institutions before the issuance of the show-cause notice. The demand of Rs. 2,94,55,469/- was found erroneous and set aside, with the appellant having already discharged the actual liability of Rs. 20,90,285/-.

3. Services provided to SEZ units:
The appellant claimed exemption for services provided to SEZ units under Notification No. 17/2011. The Tribunal noted that the appellant had produced the necessary approvals and certificates for most SEZ units, except for Punj Lloyd Ltd. The Tribunal referenced the earlier Order-in-Original, which had accepted similar claims based on Chartered Accountant certificates. Consequently, the demand of Rs. 30,68,290/- was set aside.

4. Difference in Value of Services as per ST-3 returns & Balance Sheet due to Point of Taxation Rules, 2011 (POTR):
The Tribunal observed that the liability to discharge service tax had shifted from receipt basis to accrual basis due to the introduction of POTR, 2011. The appellant had already discharged the liability on an accrual basis for the prior period. The Tribunal found that no specific category or classification was mentioned in the show-cause notice or the impugned order. Therefore, the demand of Rs. 58,09,961/- was set aside.

5. Reimbursement of expenses:
The appellant had voluntarily deposited Rs. 31,37,207/- out of the total demand of Rs. 34,64,339/- before the issuance of the show-cause notice. The Tribunal noted that the small difference of Rs. 3,23,132/- was due to erroneous computation by the Revenue. The Tribunal referenced the earlier Order-in-Original, which had accepted that the value of service should be considered inclusive of service tax. Consequently, the balance demand of Rs. 3,23,732/- was set aside.

Conclusion:
The appeal was allowed, and the appellant was found to have discharged the service tax liability before the issuance of the show-cause notice, entitling them to the benefit under Section 73(3) of the Act. The penalties imposed under Sections 77 and 78 were also set aside, and the appellant was entitled to consequential relief in accordance with the law.

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