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TMI Blog2023 (8) TMI 1048X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 78 and penalty of Rs.11,000/- under Section 77. 2. Shri G.S. Sandhe, learned counsel for the appellants submits that he was an "individual" providing services to PRTC; he was supplying drivers, conductors and mechanics, fitters, welders, blacksmiths, painters, for the workshop at the depots. He submits the circular issued by PRTC indicated the wages payable through agencies; the pay structure specified basic pay, HRA, conveyance allowance, medical and deductions of EPF, ESI, TDS etc; Accordingly rate per kilometer was arrived at; the payment was fixed for 26 working days of a month and 300 kms per day; the agreement provided for extra payment in case of night shifts and extra kilometers; 3. Learned counsel submits that the Department cannot include the consideration for salary, EPF and ESI as gross value of taxable services in terms of Section 67 of Finance act 1994. He relies on inter-Continental Consultants and Technocrats Pvt. Limited- 2018(10) GSTL401 (SC) and submits that Rule 5 of service tax (Determination of Value) Rules, 2006 is ultra vires of Section 67 of Finance act 1994. He also submits that the said decision has been followed in the following cases. R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Security (I) Ltd. (11.4.2014-CESTAT-Mumbai) MANU/CM/0621/2014 7. Learned Authorized Representative submits that the appellant's claim that being an individual they were not a "Commercial Concern" and therefore not taxable before 01.05.2006 in the light of judgment of Tribunal in the case of Nikhil Sharada (Final order no. 60150/2023 dated 06.06.23-Chandigarh); Liberty Sales- 2008 (11) STR 401(TRIDEL) and R.S Financial Services 2008(9) STR 231 (TRI-DEL). He submits that the appellant's contention that PRTC was not a client, is incorrect; the word "client" was substituted by the words "any other persons" with effect from 16.05.2008. He submits that though the word "client" is not defined under Service Tax, in the common parlance client is also a person who avails any service for a consideration. Learned Authorized Representative further submits that the appellant's claim for SSI exemption is not acceptable as they have exceeded the gross turnover of Rs.4,00,000/- in the preceding financial year. 8. Learned Authorized Representative submits that the appellant was liable to pay Service Tax in the prescribed manner and to file ST- 3 returns with the authorities; they have not paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Intercontinental Consultants & Technocrats Pvt. Ltd. (supra), which has been affirmed by Hon'ble Supreme Court as reported in 2018 (10) G.S.T.L. 401 (S.C.), wherein it is held that under provision of Section 67(1) of the Act only service element has to be included for gross amount of "such services". The relevant portion of the judgment is extracted as under : "18. Section 66 levies service tax at a particular rate on the value of taxable services. Section 67(1) makes the provisions of the section subject to the provisions of Chapter V, which includes Section 66. This is a clear mandate that the value of taxable services for charging service tax has to be in consonance with Section 66 which levies a tax only on the taxable service and nothing else. There is thus inbuilt mechanism to ensure that only the taxable service shall be evaluated under the provisions of 67. Clause (i) of sub-section (1) of Section 67 provides that the value of the taxable service shall be the gross amount charged by the service provider "for such service". Reading Section 66 and Section 67(1)(i) together and harmoniously, it seems clear to us that in the valuation of the taxable service, nothing more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account is not required to be included for the purpose of a computation of gross amount for discharge of service tax liability. Paragraph 6 of the order, which is the relevant paragraph, is reproduced as under : "6. The Employees Provident Fund & Miscellaneous Provisions Act, 1952 and the Employees State Insurance Act, 1948 created the liability upon the principal employer to contribute to the respective funds, an amount equal to employees contribution. Thus, in compliance of the said provisions, the service receiver M/s. HNGIL had contributed to such funds, the amount towards the workmen deployed by the appellant. The fact is not under dispute that such contributed amount was never given by such service receiver to the appellant. Thus, the gross value for the computation of service tax liability in the hands of the appellant will not take into consideration the amount of contribution made by the service receiver M/s. HNGIL directly into the respective heads of account. Therefore, in our considered view, service tax demand cannot be confirmed on the employer's contributed amount towards P.F., E.P.F. and E.S.I. In this order earlier decision of Tribunal in case of Neelav Jais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." 11. We, accordingly, hold that the appellant is entitled for the abatement towards the payment made on account of contribution towards ESI, EPF and PF and also towards wages and salaries while computing the assessable value in terms of Section 67 of the Act for the payment of service tax. 11. We find that the above decision of the CESTAT considers all the relevant items under discussion in the impugned order and therefore, we find that the Tribunal has decided the issue in favour of the appellants in principle. The Department relies on the decision in the case of Wisdom Guards (supra) and Bombay Intelligence Security (India) Limited (supra). However, we find that it is not the case of the Department that the appellant is separately recovering the charges towards wages, EPF, ESI etc. and that the same are not reimbursable deductions. We find that though the agreement is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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