2016 (5) TMI 193 - AT - Service Tax

Inclusion of PF contribution and bonus for man power supplied to the client in the taxable value for discharging service tax - Man power supply service - Held that - by referring to the decision of Tribunal in the case of M/s Neelav Jaiswal & Brothers Vs. Commr. of Central Excise, Allahabad 2013 (8) TMI 147 - CESTAT NEW DELHI and also taking the note of the decision of Hon ble Delhi High Court in the case of Intercontinenntal Consultants and Technocrats Pvt. Ltd. 2012 (12) TMI-150 (Delhi-HC) which was again referred by the Hon ble High Court in the case of H. M. Singh & Co. Vs. Commr. of Customs, Central Excise & Service Tax 2014 (9) TMI 218 - ALLAHABAD HIGH COURT , the bonus amount paid as incentive to the personnel deployed by the appellant is also rightly includable in the total consideration for service tax purposes. These are additional remunerations though not as per prefixed periodicity and quantum. - Decided against the appellant

Summary

Issues involved:
1. Inclusion of PF contribution and bonus in taxable value for service tax purposes.

Analysis:
The appeal before the Appellate Tribunal CESTAT Allahabad challenged an order by the Commissioner (Appeals) related to the non-inclusion of PF contribution and bonus in the taxable value for discharging service tax. The appellants, engaged in providing taxable services like man power supply service, were accused of short payment of service tax concerning services provided to a specific client. The original authority confirmed a demand and imposed a penalty, which was partially set aside by the Commissioner (Appeals). The main contention was whether PF contribution and bonus should be included in the taxable value for service tax calculation.

The appellants argued that PF contribution received from the client was fully paid to the Regional Provident Fund Commissioner and should not be considered as a wage or salary for services rendered. They also contended that bonus payments, being incentives for workers, should not be a fixed amount added to the taxable consideration. Reference was made to a Delhi High Court case stating that costs incurred by the service provider should not be considered as part of the gross amount charged for the service. Additionally, they highlighted an amendment in Section 67 of the Finance Act, 1994, which included all reimbursable expenditures in the gross consideration for taxable services. The appellants denied any intention to evade service tax and argued against the demand for an extended period.

The Revenue Authority supported the findings of the lower Appellate Authority, emphasizing the inclusion of PF amount and bonus in the gross consideration for service tax purposes. The Tribunal, after hearing both sides and examining the appeal records, focused on the correctness of including PF amount and bonus in the taxable value for service tax calculation. Referring to previous decisions, including one by the Tribunal and another by the Allahabad High Court, the Tribunal concluded that both PF contributions and bonus payments should be considered part of the gross amount charged for the taxable service provided. The Tribunal dismissed the appeal, finding no merit in the arguments presented by the appellants.

In conclusion, the judgment upheld the inclusion of PF contribution and bonus in the taxable value for service tax purposes, based on statutory obligations and previous legal precedents. The decision highlighted that these amounts constituted the gross amount charged for the taxable services provided, leading to the dismissal of the appeal.