2010 (8) TMI 187 - AT - Service Tax

Tribunal rules in favor of appellant in service tax dispute, highlighting need for evidence

The Tribunal ruled in favor of the appellant in a case concerning liability for service tax on security agency services. The appellant, accused of ... Demand of service tax and interest - Security agency services - SCN issued to the appellant requiring them to pay the service tax amount liability calculated by multiplying the number of employees with the daily wage as applicable and calculating the service tax on the same on the ground that appellants were providing security agency services - appellant submitted they had obtained the PF Number but thereafter could not undertake the work of providing security services and therefore they were only doing the work of labour contract and cleaning - Held that: - no evidence that appellant has provided security agency service has been gathered either in the form of inculpatory statement of the service provider or the receiver or in the form of any documents - Just because the appellant obtained PF registration for a security service, they have been made liable to pay service tax - Appeal is allowed Issues:1. Liability for service tax on security agency services.2. Justification of demand for service tax.3. Evidence required to establish service provided.Analysis:Issue 1: Liability for service tax on security agency servicesThe case involved a show cause notice issued to the appellant based on information from the provident fund office, alleging that they were providing security agency services and demanding payment of service tax calculated based on the number of employees and daily wages. The appellant contended that they had obtained a PF number but were only engaged in labor contract and cleaning services, not security services. The Commissioner (Appeals) partially allowed the appeal, stating that the payment of service tax under the category of manpower recruitment service was not justified.Issue 2: Justification of demand for service taxDuring the hearing, the advocate argued that the demand for service tax on security agency services was based on assumptions and presumptions. The bills issued by SGS India Pvt. Ltd. indicated services related to housekeeping and manpower provision, with no mention of security services. The original adjudicating authority's demand was primarily due to the alleged inability of the appellant to explain discrepancies between payments received and income shown in the balance sheet. The advocate highlighted that the balance sheet was provided after the show cause notice, and the demand was confirmed based on assumptions without concrete evidence. The Tribunal found the demand unsustainable as it lacked evidence of the appellant providing security agency services.Issue 3: Evidence required to establish service providedThe Tribunal emphasized the lack of evidence, such as inculpatory statements from service providers or receivers, to support the claim of security agency services being provided by the appellant. The case was deemed to rely solely on assumptions and presumptions, with the appellant being made liable for service tax simply based on obtaining a PF registration for security services. The Tribunal concluded that the orders passed by lower authorities were unsustainable and allowed the appeal in favor of the appellant.This detailed analysis of the judgment highlights the key issues of liability for service tax on security agency services, the justification of the demand for service tax, and the importance of concrete evidence to establish the services provided, ultimately leading to the Tribunal's decision in favor of the appellant.