2024 (8) TMI 317 - AT - Service Tax

Security service facilities like accommodation and medical expenses excluded from service tax calculation under Section 67

Indian Oil Corporation Limited Versus Commissioner of Central Excise & ST, Rajkot

CESTAT Ahmedabad ruled that costs of various facilities provided by service recipient to security service provider, including barrack accommodation, ... Valuation of service - various facilities given to the service provider namely M/s. Central Industrial Security Force by the appellant such as barrack accommodation, medical expenses, lease accommodation, telephone charges, vehicle and vehicle hiring charges, stationary, miscellaneous expenses etc. - whether the cost of the said facilities should be included in the gross value of security service provided by M/s. Central Industrial Security Force to the appellant? HELD THAT:- In the very same issue much water has flown as this Tribunal has passed the order wherein it was held that the cost of various facilities provided by the service recipient to M/s. Central Industrial Security Force in the course of providing security service will not be included in terms of Section 67 of the Finance Act, 1994. Consequently, no demand of service tax in such a case will sustain. In the case of Central Industrial Security Forcev. Commissioner of Central Excise & ST; CESTAT Ahmedabad [2024 (5) TMI 565 - CESTAT HYDERABAD], it was held that 'the Hon’ble Supreme Court in the case of Bhayana Builders Pvt Ltd [2018 (2) TMI 1325 - SUPREME COURT], have held that free supplies would not form part of the total value for charging of Service Tax.' The issue is settled in as much as the expenses on various facilities provided by the appellant being a service recipient to the service provider M/s. Central Industrial Security Force is not includible in the gross value for charging service tax in terms of Section 67 of Finance Act, 1994 - the impugned order is set-aside - Appeal allowed. Issues Involved:1. Whether the cost of various facilities provided by the appellant to M/s. Central Industrial Security Force (CISF) should be included in the gross value of security services provided by CISF to the appellant.Detailed Analysis:Issue 1: Inclusion of Facility Costs in Gross Value of Security ServicesArguments by the Appellant:- The appellant argued that the issue is no longer res-integra (i.e., not a new issue) and cited several decisions to support their stance:- Commissioner of Service Tax & Ors. v. Bhayana Builders Pvt. Ltd.; (2018) 3 SCC 782- Union of India & Anr. v. Intercontinental Consultants & Technocrats Pvt. Ltd.; (2018) 4 SCC 669- Intercontinental Consultants & Technocrats Pvt. Ltd. v. Union of India & Anr.; WP (C) 6370 of 2008; Judgment dated 30.11.2012- Central Industrial Security Force v. Commissioner of Central Excise & ST; CESTAT (Ahmedabad Bench); 2024 SCC OnLine CESTAT 340- Central Industrial Security Force v. Commissioner of Central Tax, Visakhapatnam; CESTAT (Hyderabad Bench); ST/26170/2013; Decision dated 10.05.2024- Bharat Coking Coal Ltd. v. Commissioner of Central Excise and Service Tax; CESTAT (Kolkata Bench); 2021 SCC On Line CESTAT 6530- Naresh Kumar & Co. Pvt. Ltd. v. Union of India & Ors.; 2014 SCC OnLine Cal 9145- Orders passed in the cases of M/s. National Fertilizers Ltd., Panipat and M/s. Rajiv Gandhi Thermal Power Plant, Haryana by the respective Commissioners of Central Excise (Appeals)- U.P. State Sugar & Cane Development Corporation Ltd. v. Commissioner of Central Excise, Allahabad; [2009] taxmann.com 564 (New Delhi-CESTAT)Arguments by the Revenue:- The Revenue reiterated the findings of the impugned order, asserting that the cost of various facilities provided by the appellant should be included in the gross value of the security service provided by CISF.Tribunal's Findings:- The Tribunal carefully considered the submissions and reviewed the records. It found that the Revenue sought to demand service tax on various facilities provided by the appellant to CISF during the provision of security services.- The Tribunal noted that in similar cases, it had been held that the cost of such facilities should not be included in the gross value of the security services in terms of Section 67 of the Finance Act, 1994.Relevant Judgments:1. Central Industrial Security Force v. Commissioner of Central Excise & ST; CESTAT Ahmedabad - 2024 SCC OnLine CESTAT 340:- The Tribunal held that costs reimbursed by the appellant to CISF for medical & telephone facilities, imprest expenses, and notional value for rent-free accommodation, free supply of rented vehicles, etc., are not to be added to the assessable value for payment of service tax on a reverse charge basis.- It referenced the Allahabad Bench decision in the case of Central Industrial Security Force v. Commissioner of Customs, C.E. & S.T., Allahabad, which held that such expenses are not includible.2. Central Industrial Security Force v. Commissioner of Central Tax, Visakhapatnam; CESTAT Hyderabad - Decision dated 10.05.2024:- The Tribunal found that the issue was covered by the Supreme Court decision in Intercontinental Consultants & Technocrats Pvt. Limited, which held that the value of free supplies provided by the service recipient cannot be treated as 'gross amount charged' for service tax purposes.3. Bharat Coking Coal Ltd. v. Commissioner of Central Excise and Service Tax; CESTAT Kolkata:- The Tribunal reiterated that expenses incurred towards medical services, vehicles, expenditure on Dog Squad, stationery expenses, telephone charges, and accommodation provided to CISF are not includible in the taxable value.4. Other Relevant Judgments:- The Tribunal also referred to similar decisions in various other units of CISF, which consistently held that reimbursement expenses and rent-free accommodation are not to be added to the gross value for service tax purposes.Conclusion:- The Tribunal concluded that the expenses on various facilities provided by the appellant to CISF are not includible in the gross value for charging service tax in terms of Section 67 of the Finance Act, 1994.- Consequently, the impugned order was set aside, and the appeal was allowed.Pronouncement:- The judgment was pronounced in the open court on 23.07.2024.