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TMI Blog2014 (1) TMI 361X X X X Extracts X X X X X X X X Extracts X X X X ..... cy as stipulated under Section 65 (79)of the Finance Act, 1994, we have no doubt that the service provided by the assessee is that of security agency - wages of security guards will form part of the assessable value as far as security agencies service is concerned. Assessee had taken the registration and also filing the returns wherein all the details were being indicated. We also note that the assessee a Retd. Army officer was not collecting any service tax form his client even on the service charges. Keeping in view peculiar facts and circumstances of the case, we find that ingredients to invoke the extended period are absent in the present case. Accordingly, we set aside the demand which is beyond the normal period of limitation. We also observe that only a part of the demand i.e. from October 2004 to March 2005 will remain within the normal period of limitation. The demand within the normal period is confirmed. We also consider the case to be fit for waiving the penalty by exercising the power under Section 80 of the Finance Act, 1944 - Decided partly in favour of Revenue. - ST/46,53/2008-Mum & ST/189/2009-Mum. - Final Order Nos. A/1999-2003/2013-WZB/C-I(CSTB) - Dated:- 1-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth revenue as also the assessee are in appeal before us. Revenue is in appeal against the valuation method adopted by the Commissioner (Appeals). Assessee on the other hand is in appeal on the ground that the services provided by him is of Manpower Supply which were not taxable before 16.6.2005 and therefore appellant is not liable to pay service tax during the impugned period. Another contention of the assessee is that salary of security guards received by him is nothing but reimbursable expenses and therefore cannot form part of the assessable value. 2. Consequent to the above mentioned order of the Commissioner (Appeals), assessee filed a refund claim before the original authority for the subsequent period which was rejected. The assessee filed an appeal before Commissioner (Appeals) against the said rejection order both on merits as also on unjust enrichment. Commissioner (Appeals) allowed the appeal of the assessee. Revenue is in appeal against the said order also on the ground that the principles of unjust enrichment would be applicable in the situation. 3. We have heard the assessee, who was present in person. He has also submitted a paper book as also written submissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decided is whether the services provided by the assessee can be considered as security services or these are manpower Supply Services. We have gone through the agreement between the assessee and M/s. BSNL. Ongoing through the agreement it is very clear that assessee is required to provide security guards to M/s. BSNL. Security guards also expected to be in Army Uniform while on duty. The responsibility of character etc. of the guards remains with the assessee. Assessee is expected to submit bill including their wages to M/s. BSNL and BSNL in turn paid to the assessee. The fact that the assessee is expected to disburse the amount of wages in presence of BSNL official will not made a difference on the nature of service or amount of service tax to be paid. Similarly, the way bill is prepared (i.e. wages plus service charges) will not make any difference in the nature of service or amount of service tax to be paid. The whole nature of activity leaves no doubt that the services provided by the assessee is the security services. The security agency is defined under the Service Tax as under: "Section 65 (79)- "security agency" means any commercial concern engaged in the business of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding security personnel or otherwise and includes the provision of services of investigation, detection or verification of any fact or activity. By virtue of the very nature of the Act, the tax burden is to pass on to the beneficiary and as such the petitioners cannot be stated as aggrieved in any manner, submits the learned Central Government Counsel. So also, it is stated that there is no dispute as to the legislative competence, with regard to the enactment of Finance Act, 1994 providing for fixation of tax in respect of Security Agents reckoning the Gross amount', it is asserted by the respondents, with reference to the law declared by the Apex Court and also the Madras High Court, that sustainability of the provision cannot be questioned or established with reference to the measure of taxation'. 9. After hearing both the sides, and also on going through the specific grounds raised in the writ petitions, this Court finds that, but for the vague challenge as to the constitutional validity of the statutory prescription, no concrete attempt has been made to establish the same. There is no case for the petitioners that the Parliament which enacted the statute does not h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f a taxing provision was not to be decided on the basis of measure of tax, i.e., the deduction allowed. One of the learned Judges, who rendered the above decision had occasion to consider the scope of the said verdict in a subsequent case as well, while sitting in Division with another learned Judge in GDA Security Private Limited v. Union of India, 2002 (140) E.L.T. 332 (Mad.) = 2006 (2) S.T.R. 542 (Mad.) which was in respect of service tax to be satisfied by the Security Agencies. There also, the legislative competence was under challenge, referring to the fixation of liability based on the Gross income" without segregating the expenditure part and also on the ground of discrimination. After an exhaustive analysis of the relevant aspects, the learned Judges observed that the challenge raised was not sustainable, holding that, it was for the State to decide as to which agency was to be taxed and which was not to be taxed. The Legislature had a discretion in levying tax on a particular class and such discretion has always been recognised and approved by the Apex Court. The Bench also referred to the observations of the Constitution Bench of the Supreme Court in Federation of Hotel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onstitution." Viewed in the said circumstances, this Court finds that the challenge raised by the petitioners against the validity of the statute is devoid of any merit. 13. It is revealed from the materials on record, particularly the specific averments raised in the counter affidavits and documents produced in the concerned cases, that the service providers/security agencies have raised bills on the prospective customers/service receivers, also including the service tax component. Ext. R2 bill produced in W.P. (C) No. 9591 of 2005 shows realisation of service tax at the rate of 5% to be paid by the service receivers. Ext. R1 in W.P. (C) 9591/2005 is the income and expenditure account of the said writ petitioner showing the salary and other benefits paid to the security personnel and Ext. P3 is the relevant agreement with the service receiver. There is no master and servant relationship between the security personnel and the clients/service receivers. The respondents have specifically averred in paragraph 9' of the counter affidavit in the said case that the petitioner in the said writ petition had earlier approached this Court by filing W.P. (C) 20017 of 2004 and 17045 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessable value. Learned assessee has quoted certain judgment relating to reimbursable expenses. These judgements are not relating to security agency service but are mainly relating to consulting engineer or other consulting services and relate to Hotel/Travelling expenses. Those judgments cannot be applied for security service, particularly wages cannot be called reimbursable expenses, (these are not incidental for providing the service tax, but main element in providing the service) we therefore, reject the assesses contention that wages are nothing but reimbursable expenses. We therefore hold that wages of security guards will form part of the assessable value as far as security agencies service is concerned. We do not consider it necessary to discuss every judgment quoted by revenue or assessee. We, therefore allow Revenue's appeal on merits. 8. Another contention of the assessee is that appeal has not been filed by the department after following the due process. We have seen the appeal papers, order of Commissioner (Appeals) has been examined by the Committee of Commissioners. The Committee of Commissioners vide their order dt.13.2.2008 have examined the order and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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