2023 (5) TMI 809 - AT - Service Tax

Tribunal rules in favor of Welfare Org on service tax liability for Security Agency Service

M/s. Bhootpurva Sainik Kalyan Sangh Versus Commissioner of Central Excise & Service Tax, Ranchi

The Tribunal ruled in favor of the Appellants, a Welfare and Rehabilitation Organization of Ex-Servicemen, in a case concerning the liability of payment ... Valuation of service tax - Security Agency Service to Government and Public Sector Undertakings - non-inclusion of wages, EPF, ESI, Bonus, Gratuity, House Rent Allowance etc in the taxable value for the purpose of payment of service tax - HELD THAT:- The Appellant has provided Security Agency Service to Government and Public Sector Undertakings and paid Service Tax on the service charges collected by them from the customers. However, they have not included the wages, EPF, ESI, Bonus, Gratuity, House Rent Allowance etc. to arrive at the taxable value as they have considered these receipts as re-imbursible expenses which are not includible in the gross value for the purpose of payment of Service Tax. The Appellant has not disputed the liability of payment of service tax for the security agency service rendered by them to their customers. They were regularly filing Service Tax returns during the period April 2004 to March 2006 and intimating the gross value on which they have paid Service Tax. Thus, it is observed that the Appellant has not suppressed any information from the department and declared the taxable value in the ST-3 returns filed by them. Hence, it cannot be alleged that they have suppressed the information from the department with an intention to evade payment of service tax. From the impugned order, it is found that there is no evidence brought on record to substantiate the claim in the notice that the Appellant has suppressed the taxable value from the department. Appeal allowed. Issues involved: The issue involves the liability of payment of service tax by a Welfare and Rehabilitation Organization of Ex-Servicemen providing Security Agency Service to Government and Public Sector Undertakings, specifically concerning the inclusion of wages, EPF, ESI, Bonus, Gratuity, House Rent Allowance in the taxable value for the purpose of payment of service tax.Summary:Liability of Service Tax:The Appellants, a Welfare and Rehabilitation Organization of Ex-Servicemen providing Security Agency Service to Government and Public Sector Undertakings, were demanded service tax for the period from April 2004 to March 2006, including cess. The issue revolved around whether the Appellants were liable to pay service tax on the mentioned charges.Interpretation of Taxable Value:The Appellants argued that they were not aware that charges such as wages, EPF, ESI, Bonus, Gratuity, House Rent Allowance were to be included in the taxable value for service tax payment. They contended that they regularly paid service tax on service charges received but did not consider these charges as part of the taxable value.Limitation and Suppression of Information:The Appellants maintained that the notice issued invoking the extended period of limitation was not sustainable as they had not suppressed any information from the department. They argued that they had consistently declared the taxable value in the ST-3 returns filed, indicating no intention to evade payment of service tax.Judgment:The Tribunal observed that the Appellants had not disputed the liability of paying service tax for the security agency service provided. It was noted that the Appellants regularly filed service tax returns, declaring the gross value on which they paid tax, without suppressing any information. The Tribunal concluded that there was no evidence of intent to evade tax and deemed the show cause notice invoking the extended period of limitation as unsustainable. Consequently, the demand for service tax, interest, and penalty imposed were held unsustainable on the ground of limitation, leading to the allowance of the appeal filed by the Appellants.