TaxTMI 
TaxTMI 
2013 (2) TMI 356
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.... members of the said Association. In fact, the said Association is stated as registered under the provisions of the Travancore-Cochin (Literary, Scientific and Charitable Societies) Registration Act. The grievance is mainly with regard to the steps taken by the respondents to mulct the liability towards service tax upon the members of the Association under various heads; by way of tax, interest, penalty etc., reckoning the 'Gross income' of the members, i.e. without realizing or taking into account the actual 'service aspect' rendered. Almost similar pleadings and prayers have been raised by the other petitioners as well, who are the concerned security service providers and are not the members of the Association. The petitioners contend that their undertakings actually do not have any clients at all and that the tax liability is to be fixed only with respect to the actual charges/commission realised by them in providing the security personnel to the service receivers. It is contended that, in most of the cases, the agencies who provide the security personnel to the service receivers, are getting only a meagre amount as 'commission' and bulk of the amounts received is spent towards ....
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.... Ors., (2004) 5 SCC 632 = 2006 (3) S.T.R. 260 (S.C.) = 2004 (167) E.L.T. 3 (S.C.) and also on the decision of the Constitution Bench of the Apex Court in Federation of Hotels and Restaurant v. Union of India, AIR 1990 SC 1637. 5. Mr. Mathai M. Paikeday, the learned Sr. Counsel appearing for the petitioner in W.P. (C) 34643 of 2004 led the arguments on behalf of the petitioners. The learned Sr. Counsel submitted that the challenge is not with regard to the inclusion of the petitioner within the 'Service Tax Net', but against fixation of the value of 'taxable service' under Section 67, reckoning the 'Gross amount, without segregating the expenses towards salary and statutory payments under the ESI/EPF, which constitute the major portion of the total figure involved. Reliance is placed on the decision rendered by a Division Bench of the Madras High Court in Advertising Club v. Central Board of Excise & Customs, 2001 (131) E.L.T. 35 (Mad.) = 2006 (2) S.T.R. 457 (Mad.) and also on some decisions rendered by the CESTAT, Bangalore and CESTAT, Delhi. The learned Senior Counsel submits that in most of the cases herein, salary is being paid directly by the service receivers and as such....
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....ned under Section 65 was already brought under the net as per the Finance Act, 1997 (Act No. 26 of 1997) w.e.f. 7-7-1997. Section 65(94) of the Finance Act defines the term, 'Security Agency' as follows : "'Security Agency' means any commercial concern engaged in the business of rendering service relating to security of any property, whether movable or immovable or of any person, in any manner and includes the service of investigation, detection or verification of any fact or activity whether of a personal nature or otherwise including the services of providing security personnel." Section 65(105)(w) defines the term 'taxable service' as follows : "Any service provided to a client by a security agency in relation to the security of any property or person, by providing security personnel or otherwise and includes the provision of services of investigation, detection or verification of any fact or activity. By virtue of the very nature of the Act, the tax burden is to pass on to the beneficiary and as such the petitioners cannot be stated as aggrieved in any manner, submits the learned Central Government Counsel. So also, it is stated that there is no dispute as to the legislativ....
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....ein. 11. The correctness and sustainability of 'fixation of service tax' with reference to 'Gross income' of the Advertising Agencies in the State of Tamil Nadu, without excluding the expenditure part, while extending such benefits to some others was challenged before Madras High Court, on the plea of discrimination and violation of Article 14, besides challenging the constitutional validity of the statute. After considering the various provisions of the Statute, constitutional mandate and judicial precedents, a Division Bench of the Madras High Court, as per the decision in Advertising Club v. Central Board of Excise & Customs, 2001 (131) E.L.T. 35 (Mad.) = 2006 (2) S.T.R. 457 (Mad.) held that the challenge was unfounded and that the constitutional validity of a taxing provision was not to be decided on the basis of measure of tax, i.e., the deduction allowed. One of the learned Judges, who rendered the above decision had occasion to consider the scope of the said verdict in a subsequent case as well, while sitting in Division with another learned Judge in GDA Security Private Limited v. Union of India, 2002 (140) E.L.T. 332 (Mad.) = 2006 (2) S.T.R. 542 (Mad.) which was in r....
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....r is expected to collect it from the client. The observations of the Apex Court in this context are worthwhile to be noted, as extracted below : "Moreover, a tax cannot be struck down on the ground of lack of legislative competence by enquiring whether the definition accords what the layman's view of service is. It is well settled that in matters of taxation laws, the Court permits greater latitude to pick and choose objects and rates for taxation and gives a wide discretion with regard thereto. Therefore, a levy of service tax on a particular kind of service could not be struck down on the ground that it does not conform to a common understanding of the word "service", so long as it does not transgress any specific restriction contained in the Constitution." Viewed in the said circumstances, this Court finds that the challenge raised by the petitioners against the validity of the statute is devoid of any merit. 13. It is revealed from the materials on record, particularly the specific averments raised in the counter affidavits and documents produced in the concerned cases, that the service providers/security agencies have raised bills on the prospective customers/service r....