2014 (4) TMI 59 - AT - Service Tax

Appeal Dismissed: Upheld Service Tax Demand, Interest & Penalties. Key points: Security services, Profit, Suppression.

CONTINENTAL DRUGS COMPANY PVT LTD. Versus COMMISSIONER OF SERVICE TAX, MUMBAI

CONTINENTAL DRUGS COMPANY PVT LTD. Versus COMMISSIONER OF SERVICE TAX, MUMBAI - 2015 (39) S.T.R. 154 (Tri. - Mumbai) Issues:1. Appellant providing security services without registering for service tax.2. Dispute over the nature of services provided by the appellant.3. Appellant's claim of operating on a no-profit-no-loss basis.4. Appellant's contention of not suppressing facts to evade service tax.Analysis:1. The appeal challenged a demand for service tax on security services provided by the appellant to group companies. The investigation revealed the appellant was not registered for service tax despite receiving substantial consideration for services rendered. The appellant contested the levy, arguing they provided various services beyond security. However, evidence indicated the appellant primarily offered security services, as confirmed by statements and documents.2. The appellant claimed to offer services like maintenance, auditing, and financial advice in addition to security. However, statements from company officials and documentary evidence emphasized the predominant provision of security services. Lack of detailed billing records and reliance on circulars without specific service details weakened the appellant's argument, leading to the conclusion that security services were the main offering.3. The appellant argued they operated on a no-profit-no-loss basis, exempting them from service tax liability. The Tribunal rejected this claim, noting the appellant charged the group companies for services rendered, treated the income as business revenue, and failed to provide evidence supporting their no-profit-no-loss status. The lack of proof regarding complete salary reimbursement further undermined this argument.4. The appellant contended they did not suppress facts to evade service tax, seeking to avoid penalties. However, the Tribunal found no evidence of the appellant's consultation with tax authorities or legal experts regarding their tax obligations. The failure to register or follow statutory procedures indicated an intent to evade tax, justifying the imposition of penalties and confirming the duty demand.In conclusion, the Tribunal dismissed the appeal, upholding the service tax demand, interest, and penalties. The judgment highlighted the appellant's predominant provision of security services, rejected claims of no-profit-no-loss operation, and established the appellant's suppression of facts regarding service tax obligations.