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2021 (9) TMI 23 - AT - Service TaxValuation - inclusion of notional value of the free residential accommodation, free vehicles provided and the actual amount of reimbursement claimed by CISF for expenditure incurred on petty imprest/medical/telephone, in the assessable value or not - reverse charge mechanism - revenue neutrality - HELD THAT - The appellant is already depositing service tax on reverse charge basis on the cost of deployment, cost of arms and ammunition, cost of clothing items (uniforms), etc. which is not in dispute. The 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. Also, there is no dispute in the entire case proceedings that expenses have been reimbursed on actual basis. Hence, the contentions of the Revenue cannot be accepted. Extended period of limitation - HELD THAT - There are no case of fraud or suppression and hence, the notice issued by invoking extended period is not sustainable. Appeal allowed - decided in favor of appellant.
Issues:
- Appellant assailing demand of service tax and penalty imposed under Finance Act, 1994. - Inclusion of notional value of free facilities provided to Central Industrial Security Force (CISF) in assessable value for service tax under reverse charge mechanism. - Applicability of reimbursement claimed by service provider in assessable value. - Legality of service tax liability under reverse charge mechanism for security services provided by CISF. - Invocation of extended period of limitation and imposition of penalty. Analysis: 1. The appeal challenged the demand of service tax and penalty imposed under the Finance Act, 1994. The appellant, a PSU engaged in mining and selling coal, received security services from CISF. The Revenue contended that notional value of free facilities provided to CISF should be included in the assessable value for service tax under reverse charge mechanism. 2. The appellant argued that the reimbursement claimed by the service provider and the cost of free supplies should not be included in the assessable value based on legal precedents. Citing relevant Supreme Court and Tribunal decisions, the appellant contended that the value of free supplies and reimbursements need not be included in the taxable value for service tax liability. 3. The appellant also argued that as a PSU availing Cenvat Credit, the impugned demand for reverse charge liability would not result in any loss to the Government Exchequer. The appellant emphasized various decisions supporting their stance on the issue of inclusion of free supplies and reimbursements in the assessable value. 4. The appellant further contended that CISF, being a statutory body separate from the State, should not be subject to service tax under the reverse charge mechanism. The appellant highlighted the statutory functions of CISF and its role as an armed force of the Union of India, arguing against the imposition of service tax on such services. 5. The Revenue, however, supported the demand confirmed by the Commissioner, relying on specific Tribunal decisions to argue that reimbursements claimed as exclusions from assessable value should be on an actual basis and pre-approved by the service recipient. 6. After hearing both parties and examining the records, the Tribunal found that the costs reimbursed to CISF for various facilities should not be added to the assessable value for service tax under reverse charge mechanism. Citing relevant Tribunal decisions, the Tribunal held that expenses towards medical services, vehicles, and other facilities provided to CISF need not be included in the taxable value. 7. The Tribunal noted that the legal position on the issue had already been settled by the Supreme Court and other Tribunal decisions, and therefore, the demand confirmed by the Commissioner was not sustainable. The Tribunal also rejected the invocation of extended period of limitation and upheld the appellant's contentions, allowing the appeal with consequential relief.
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