2010 (4) TMI 187 - AT - Service Tax

Tribunal overturns service tax demand and penalties for 2003-2004 security services

The Tribunal set aside the service tax demand and penalties imposed under the Finance Act, 1994, for security services provided in 2003-2004. The ... Security services- Service Tax of Rs.20,818/- and interest thereon has been demanded from the appellant on the ground that the appellant provided security services during the year 2003-2004. Penalties have also been imposed. Held that- It was submitted that the service provided to M/s Dinesh Chemicals covers more than 85% of the total value of the service on which tax has been demanded. Therefore, I consider that the appellant has made out a case that the service provided by them was not security agency service. In the absence of any investigation done by the department and in view of the evidence provided by the appellant, I find that the demand of service tax made against the appellant cannot be justified. Naturally, no penalty could have been imposed. In view of the above discussion, the impugned order is set aside and the appeal is allowed. Issues:Service tax demand for security services provided during 2003-2004, penalties imposed under various Sections of Finance Act, 1994.Analysis:The appellant was demanded service tax of Rs.20,818/- along with interest for providing security services in 2003-2004, with penalties imposed under the Finance Act, 1994. The Revenue's case was based on three grounds: the appellant's registration with the PF Department as a security provider, collection of service charges from customers, and lack of specification of service in some invoices. The Chartered Accountant for the appellant argued that PF registration does not equate to providing security services, collected amounts were service charges not service tax, and lack of service specification in invoices does not prove security service provision. The appellant's inability to provide details due to business closure in 2004 was highlighted. The Revenue argued that specific service details in other invoices prove their case, and PF registration is corroborative evidence.The Tribunal considered both sides' submissions and noted that the invoices lacked service details for which tax was demanded, shifting the burden to the department to prove service provision. The absence of investigations and reliance on presumptions based on PF registration was criticized. The appellant presented a letter from a client certifying a manpower supply contract, not security services, covering a significant portion of the taxed service value. Due to lack of departmental investigation and evidence provided by the appellant, the Tribunal found the service tax demand unjustified, leading to the dismissal of penalties.Therefore, the Tribunal set aside the impugned order and allowed the appeal, emphasizing the need for proper evidence and investigation to support service tax demands and penalties under the Finance Act, 1994.