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2016 (12) TMI 859 - AT - Service TaxDemand of service tax - Security Agency and Manpower Recruitment Agency Services - demand raised on the ground that the appellant provided the said services to their clients - Held that - We find that the appellants are a Board constituted under Section 6 of the Maharashtra Private Security Guards (Regulation of Employment & Welfare) Act, 1981 - it cannot be said that the Board is a Public Authority or Statutory Authority. Thus the service provided by them is not a statutory function and charges collected by them are not statutory levy. In view of above, they are chargeable to Service Tax as a regular service provider. It is apparent that the wages and allowances are collected by the Board as an Agency for payment to the concerned persons/authorities. Therefore, the wages and allowances are excludible from the value of service tax. Thus, the taxable value for the purpose of levy needs to exclude these charges. The demand is modified to that extent. As regards penalty imposed u/s 76, 77 and 78 of the Finance Act, 1994, we find that the board has been created for welfare of the working class. One of the purposes of the board is to ensure that working people are treated well and not exploited. In these circumstances, invoking Section 80 of the Finance Act, 1994, we set aside penalties under Sections 76 and 78 of the Finance Act, 1994. Appeal disposed off - decided partly in favor of appellant.
Issues:
1. Whether the appellant, a Security Guards Board, is liable to pay Service Tax under the head of Security Agency and Manpower Recruitment Agency Services. 2. Whether the functions performed by the appellant are statutory in nature and exempt from being classified as business activities. 3. Whether penalties imposed under Sections 76, 77, and 78 of the Finance Act, 1994, are justified. Analysis: Issue 1: Liability for Service Tax The appellant, a Security Guards Board, was collecting wages, allowances, and administration charges from clients. The Revenue alleged that the appellant provided Security Agency and Manpower Recruitment Agency Services, demanding Service Tax on the entire amount collected. The Commissioner confirmed the demand, imposing penalties under Sections 76 and 78 of the Finance Act, 1994. The appellant argued that they are a statutory body established under the Maharashtra Private Security Guards Act, providing welfare for security guards and not engaging in business activities. The Tribunal found that the charges collected by the Board were not statutory levies but regular service charges, making them liable for Service Tax. Issue 2: Statutory Nature of Functions The appellant contended that their functions were statutory in nature, citing relevant provisions of the Maharashtra Private Security Guards Act. They argued that the charges collected were for the welfare of security guards and not for business purposes. The Tribunal examined the legal framework governing the Board's operations and determined that the Board's activities were not purely statutory but included regular service provision. The Tribunal modified the demand by excluding wages and allowances from the taxable value for Service Tax purposes. Issue 3: Penalties Imposed Penalties were imposed under Sections 76, 77, and 78 of the Finance Act, 1994. The Tribunal noted that the Board was established for the welfare of the working class and to prevent exploitation. Considering this aspect, the Tribunal set aside the penalties imposed under Sections 76 and 78 of the Finance Act, 1994, invoking Section 80. The appeal was allowed partially, with penalties under Sections 76 and 78 being set aside. In conclusion, the Tribunal found the Security Guards Board liable for Service Tax due to the nature of their activities, clarified the statutory versus business nature of their functions, and set aside certain penalties imposed under the Finance Act, 1994, based on the welfare-oriented purpose of the Board.
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