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TMI Blog2024 (9) TMI 1249X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal in the case of M.P Security Force Vs. CCE ST [ 2019 (8) TMI 211 - CESTAT NEW DELHI ]. In the said case, the appellant M.P. Security Force provided security services and manpower supply service during the relevant period. The question before the Tribunal was whether the component of salary, EPF, ESI and uniform allowances etc. be included in the gross amount charged to their clients. Following the judgment of the Hon ble Supreme in UOI Vs. Intercontinental Consultants and Technocrats Ltd. s case [ 2018 (3) TMI 357 - SUPREME COURT ] interpreting the expression such services under Section 67(1) of the Finance Act, 1994, the Tribunal held 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. Thus, the administrative charges collected in providing Manpower Recruitment and Supply Agency Service, is only to be part of the gross taxable value and all reimbursable expenses, salary, bonus, etc. paid to the employee by the appellant and collected from their clients cannot be included w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice in section 65(105)(k) and value as per section 67 of the Act is intertwined. Value envisaged in section 67 is only "gross amount charged for such services". The expression "such service" would mean only "services in relation to manpower supply" and not the value of "manpower itself". Reliance is placed on the judgment of Honorable Supreme Court in the case of UOI v. Intercontinental Consultants & Technocrats Pvt Ltd, [2018 (10) GSTL 401 (SC)]. Hence, in the Appellant's case, the value of their service is only "service charges and/or administration charges" received as per Agreements and on which they have already discharged service tax. Hence, reimbursements in question received do not form part of "value" of taxable service. ➢ the Department has not appreciated the "taxable service" definition in section 65(105)(k) as per which "taxable service" is "any service in relation to the recruitment or supply of manpower". It is not the "manpower" itself. In this regard, reliance is placed on the judgment of the Honorable Delhi High Court in the case of Home Solution Retail India Ltd v. UOI, [2009 (41) STR 433 (Del.)] (paras-33 & 34) wherein in the context of "renting of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd., [(2023) 13 Centax 33 (Tri-Del)] Maintained by Supreme Court as reported in (2023) 13 Centax 34 (SC). (m) Young Brothers Transporters & Contractors v. CCE, [2017 (6) GSTL 513 (Tri-Del.)]. ➢ the Department has also not appreciated the provisions of the Contract Labour (Regulation and Abolition) Act, 1970 which is applicable to the Appellant (being a "contractor") as also the customers of the Appellant (who fall under "principal employer"). As per labour laws, though the Appellant being a contractor has supplied labour to their customers (who are "principal employer"), there exists a "master-service"/"employer-employee" relationship between the "principal employer" through "the contractor" and the labourers/workers. Hence, the reimbursement of salary, wages and other employee allowances received by the Appellant from the "principal-employer" is nothing but "employee cost" which is not regarded as "service" and not taxable at all. Reliance is placed on the following judgments, - (a) Senior Regional Manager, Food Corporation of India v. Tulsi Das Bauri, [(1997) 5 SCC 51]. (b) Indian Airlines v. Central Govt. Labour Court, 1987 SCCOnline Del 9. (c) Hussainbha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted on eligible service income and not on reimbursement expenses like salary expenses statutory dues, conveyance, travelling, etc.; hence confirmation of demand invoking extended period is not justified. He has also pleaded that levy of penalty under Section 78 of the Finance Act, 1994 in the present case is unwarranted and liable to be set aside. 4. Learned AR for the Revenue reiterated the findings of the learned Commissioner. 5. Heard both sides and perused the records. 6. The short question involved in the present appeal for consideration is: Whether reimbursement expenses incurred by the appellant viz. basic salary, advance, overtime allowance, PF administration and other charges, ESIS, HRA, ex-gratia, medical etc. paid to the employees and recovered from the customers, be includable in the gross taxable value under Section 67 of the Finance Act, 1994 read with Service Tax Valuation Rules in providing 'Manpower Recruitment and Supply Agency Services' during the period 16.06.2005 to 31.03.2012. 7. The learned Commissioner in the impugned held that the gross amount charged by the service provider for such services provided in terms of Section 67(1)(i) of the Finance Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 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 and nothing less than the consideration paid as quid pro quo for the service can be brought to charge. Sub-section (4) of Section 67 which enables the determination of the value of the taxable service "in such manner as may be prescribed" is expressly made subject to the provisions of sub-section (1). The thread which runs through Sections 66, 67 and Section 94, which empowers the Central Government to make rules for carrying out the provisions of Chapter V of the Act is manifest, in the sense that only the service actually provided by the service provider ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Jaiswal and Brothers v. Commissioner of Central Excise, Allahabad - 2014 (34) S.T.R. 225 (Tri. - Del.) was also considered, which is referred in the impugned order. In this regard, we also find that the Hon'ble Allahabad High Court in the case of Ehardwez Security Services v. Union of India - in Civil Writ Petition No. 437 of 1998 held that the respondent shall be entitled to charge service tax on the gross except after giving the abatement in respect of statutory levy and the taxes and if the same has direct relation with the services rendered by the client and charg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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