2016 (10) TMI 684 - HC - Service Tax

Ex-Serviceman's Security Agency: Payment for Disputed Service Tax

The Court directed the petitioner, an Ex-Serviceman running a Security Agency, to pay a sum towards disputed service tax liability to present their case ... Opportunity of being heard - security agency - Ex-Serviceman - registration of father-in-law's house as place of business due to absence of his own proper address at the relevant time - demand of service tax against petitioner and notice sent to registered address of which no reply received from petitioner - two more opportunities given to petitioner of being heard and notice published in the notice board of the Commissioner of Service Tax, Service Tax-II, Commissionerate, Chennai-40 - Held that: - considering the quantum of demand which has been confirmed in the impugned order, which is an exparte order, this Court is of the view that the petitioner could be granted an opportunity to go before the respondent and place all materials including their Books of Accounts to establish their case. However, to be entitled to such an opportunity, the petitioner should be put on terms. The petitioner directed to pay a sum of ₹ 5,00,000/- towards the disputed service tax liability within a period of two weeks and if the same is done, then the petitioner is entitled to treat the impugned proceedings as a show cause notice, and re-adjudication will be done - petition disposed off - decided in favor of petitioner. Issues:1. Service tax liability on salaries of security personnel provided by the petitioner's agency.2. Failure of the petitioner to respond to show cause notice and address discrepancies.3. Granting the petitioner an opportunity to present their case before the respondent.Analysis:1. The petitioner, an Ex-Serviceman running a Security Agency, argued that the salary of security personnel provided is fully reimbursed by clients, with a nominal service charge. Despite the contention that service tax liability should not apply to reimbursed salaries, the petitioner failed to respond to the show cause notice issued by the Department. The Court acknowledged the need for the petitioner to present their case and directed them to pay a sum towards the disputed service tax liability to avail the opportunity for a fresh adjudication.2. Addressing the issue of the petitioner's failure to respond to the show cause notice, the Court noted that the notices were affixed at the Commissionerate's Notice Board instead of the registered address of the petitioner. However, considering the ex parte order and the quantum of demand confirmed, the Court deemed it appropriate to grant the petitioner a chance to present all materials, including their Books of Accounts, before the respondent. The petitioner was instructed to pay the specified sum within a given period to proceed with the re-adjudication process.3. In light of the circumstances, the Court disposed of the writ petition with the direction for the petitioner to pay the specified amount towards the disputed service tax liability within a stipulated timeframe. Upon compliance, the petitioner was granted the opportunity to treat the impugned proceedings as a show cause notice, submit their reply with relevant documents, and attend a personal hearing before the respondent for a fresh adjudication in accordance with the law. No costs were awarded, and the connected miscellaneous petitions were closed as a consequence of the judgment.