TaxTMI 
TaxTMI 
2025 (7) TMI 280
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....vice to M/s. Salem Steel Plant, Salem and not furnished correct information in the prescribed Half-Yearly ST-3 Returns in contravention of the provisions of Sections 67, 68 & 70 of the Finance Act, 1994, read with Service Tax Rules, 1994. Hence, vide letter C.No.IV/06/45/2012 HPU (SIV III) dated 13-07-2012, the General Manager, Steel Authority of India Limited, Salem Steel Plant, Salem (SSP) was asked by the Department to furnish the following documents / details :- i. Copy of contract / terms and conditions for engaging the services of CISF; ii. Month-wise details of amount paid to CISF towards salary and allowances, initial clothing and equipment charges, arms and ammunition, leased accommodation, medical expenses, vehicle running and maintenance, telephone, stationery, dog squad, insurance and any other expenses for the period from 01.04.09 to 31.03.12. 1.3 The General Manager (F & A), Salem Steel Plant, vide his letter dated 05.07.2012 informed that as per the MOU entered into with the Appellant, in addition to salary and wages, SSP has to provide Office and Residential accommodation, transportation facility, furniture for office, medical facility etc. at free of cost to t....
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.... their letter dated 25.10.2013 informed that they have not recovered any proceeds from the Appellant for the same and other infrastructure facilities offered to them. 1.9 As per MOU entered into between the Appellant and Steel Authority of India, Salem Steel Plant, Salem a. SSP shall provide the infrastructure, office accommodation, security related infrastructure, residential accommodation (married and bachelor), communication (including telephone / wireless / internet), transport, modern security gadgetry, furniture and other equipment / amenities, for deployment of CISF at the unit; b. CISF reserves the right to incur the expenditure on infrastructure items like strengthening of Kote, Explosive Magazine, Morchas, Watch Towers, Fencing etc. and the expenses so incurred will be recouped by SSP. c. CISF will procure arms and ammunition, critical gadgets, security system etc. which may be required to be deployed in compliance with the provisions contained in the MOU and the cost of the same shall be borne by SSP. d. SSP shall provide medical facilities to the CISF personnel and their families strictly at par with their own employees. SSP shall also reimburse the medical cla....
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....nd of Service Tax of Rs.26,82,467/- from the Appellant under Section 73(2) of the Finance Act, 1994. Further, interest was demanded from the Appellant under Section 75 of the Finance Act, 1994 and penalty of Rs.26,82,467/- was imposed on the Appellant under Section 78 ibid along with penalty of Rs.10000/- under Section 77(2) of the Finance Act, 1994. 2. The Appellant carried the matter in appeal and the appeal bearing A.No. 40/2015-ST filed by the Appellant was rejected by the Commissioner of Central Excise (Appeals-I Coimbatore) vide the impugned order dated 19.03.2015. 3. Being, aggrieved by the impugned order dated 25.03.2015 passed by the Commissioner of Central Excise, the Appellant has filed this appeal on the following grounds that : - A. The Appellant is not receiving any 'Additional Consideration' for the security services, if any, rendered by way of deputation of security personnel to SSP. Therefore, demand of Service Tax on such notional consideration is not sustainable. i. During the relevant period, they were paying service tax under the category of security services as defined in section 65(105)(w) of the Act. Section 65(105)(w) of the Act specifies three servic....
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....ly agreed between the parties of the MOU ii. The CISF Act and MOU only provide for deputation of the CISF personnel. This implies that the Appellant is only permitted under the CISF Act to depute the personnel. While the Appellant is entrusted with the security of the industrial undertaking, the duty is discharged by way of deputation of security personnel who function under the superintendence, direction and control of the industrial undertaking to which they are deputed. iii. In order to use the services of such security personnel, SSP must make suitable provision of free accommodation for the personnel deputed at its premises. iv. This effectively leads to the conclusion that the security services of CISF are confined to supply of security personnel who function under the supervision, direction and control of the industrial undertaking. Accordingly, Section 67 of the Act which is subject to Section 66 read with Section 65(105)(w) of the Act would operate only to the extent of the value for such service. v. Rule 5 of the Valuation Rules lays down the various costs and expenditure that are to be included or excluded from the value of taxable service. The scope of Rule 5(1)....
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.... states that it is only the value of the service rendered that should be brought to charge under Section 67 of the Act. The Appellant is rendering the security service by way of deployment of security personnel and it is only the value which represents the activity of supply of security personnel which should be brought to tax under Section 67 of the Act. The value of providing security personnel will not include the specified costs which are incurred by SSP at the behest of SSP for maintenance of security personnel cannot be said to provide a benefit to the Appellant and hence cannot amount to consideration, directly or indirectly. ix. The value which is billed by the Appellant is the value for deployment of security personnel and represents the full consideration of service in the form of deputation of service personnel. The additional costs incurred by SSP cannot be treated as consideration for the service of deployment of security personnel. The Appellant is appropriately covered by Section 67(1)(i) of the Act and the invocation of Section 67(1)(ii) of the Act in respect of the various costs incurred by SSP is incorrect. x. The facilities in the nature of medical benefit, e....
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.... to tax, the alleged additional consideration are not liable to tax. i. Even if the Appellant is providing "security agency services" to SSP, the Appellant is not receiving any consideration for the said service. The payments being made by SSP to the Appellant are in the nature of statutory fees to meet the cost of deployment of the security personnel. Where this primary payment to the Appellant itself is not consideration, there cannot be a question of any additional consideration being attributable to the activity being undertaken by the Appellant. ii. In the first place no consideration is paid either in cash or in kind by SSP to the Appellant for receiving security agency service. SSP only paying charges to the members of the Armed forces as per the provisions of the CISF Act. Further the Appellant charges Supervision Charges at a nominal percentage from SSP. Such charges paid to the Appellant is for meeting the day to day expenses of the Head Office of the Appellant. The Appellant in this regard places reliance on Rule 73 of the CISF Rules, 2001. iii. The deployment of security personnel is as part of the statutory functions of the Appellant under the CISF Act. iv. No ....
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....ent expenses cannot be included in the value of the taxable service. D. The appellant is a creation of Statute and is not undertaking any business. Hence, it is not covered within the ambit of Security Agency's Service. i. It is argued that Appellant is a creation of a Statute and not covered under the definition of security agency as defined in the Act. It is seen from the Act that to be covered under the definition of a security agency as per the Act, the following conditions have to be fulfilled : 1. That the person is engaged in the business. 2. The business is of providing security to any property, immovable or movable or person. 3. That the service also includes investigation, verification or detection of any fact or activity whether personal or otherwise. 4. That the service of providing security personnel is also covered. Thus, a person will be covered within the definition of a security agency when it is engaged in the business of providing security and undertakes any of the services as mentioned at serial no. b, c and d. The Appellant is not engaged in the business of providing security. Hence, it is not liable to pay service tax under security agency servic....
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....d manner" Section 2 (86) of the Act defines 'prescribed' to mean prescribed by rules made under this Chapter. Section 67 of the Act provides for levy of service tax with reference to value under three circumstances: a) Where consideration is in money, gross amount charged b) Where consideration is not wholly or partly in money, such amount in money which is equivalent to consideration c) Where consideration is not ascertainable, as amount determined in the prescribed manner. iii. Section 67 of the Act determines the value for the purpose of levy of service tax. The three circumstances enlisted above aim at arriving at the consideration for the service. Among the three circumstances, the Act provides for computation of the value in terms of the Rules only if the case of the assessee falls under clause (iii) of section 67(1). The section does not provide for reference to any prescribed rule for cases which fall within section 67(1)(ii) of the Act. The Appellant's case does not also fall under section 67(1)(iii) of the Valuation Rules on account of the reason that value, if any, is ascertainable. Thus, the provisions of Rule 3 of the Valuation Rules cannot be invoked to the ....
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....h of CESTAT and Larger Bench decided the issue. In such a situation, no suppression can be alleged on part of the Appellant. In this regard, reliance is placed on the following judgments: (a) CCE v. NIRC 2009 (13) STR 196 (Bom.) (b) Ispat Industries Ltd. v. CCE 2006 (199) ELT 509 (Tri.-Mum) (c) Chemicals & Fibres of India Ltd. v. CCE 1998 (33) ELT 551 (Tri.) (d) Homa Engineering Works v. CCE 2007 (7) STR 546 (Tri-Mum) (e) Jaihind Projects Ltd. v. CCE, 2010 (25) STT 196 (Tri-Ahmedabad) vi. Extended period of limitation is not applicable in cases of dispute of interpretation of law. In this regard, reliance is placed on the decision of the Hon'ble Tribunal in the case of K.K. Appachan v. CCE, Palakkad, 2007 (7) S.T.R. 230 (Tri-Bang.) wherein it is held that, "... Moreover as the issue involves interpretation of law, the longer period cannot be invoked." vii. The Appellant is a Central Government Agency and is not engaged in any commercial activities and they did not gain any pecuniary benefits from the said non-payment of tax. Thus, there can be no intention to evade payment of Service Tax. For this reason also, the extended period of limitation is not invocable. 4.1 T....
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.... be included (Paragraph 3). 3 Bharat Coking Coal Ltd v. Commissioner of Central Excise and S.Tax, Dhanbad [2021 (9) TMI 23 - CESTAT KOLKATA] Facilities to CISF for (i) free residential accommodation, (ii) free medical services to the CISF personnel at its premises, (iii) free vehicles / cabs to CISF personnel, (iv) reimbursement of expenditure on petty imprest expenses, medicines and telephone on actual submission of bills/invoice are not includible in the taxable value. 4 CISF v. Commissioner of Service Tax, Pune-I [2021 (11) TMI 835 - CESTAT MUMBAI] Whether facilities like accommodation, medical facility, vehicle, telephone, stationery etc. are to be included in the assessable value of services provided by CISF. Held that the facilities are not to be includible in the assessable value. 5 Sr. Commandant, CISF (BHEL Unit) v. CCE, Bhopal [2023 (4) TMI 608 - CESTAT NEW DELHI] The issue was whether service tax is to be discharged on non- monetary consideration such as free accommodation, medical facilities, vehicle and telephone, insurance and stationery and other expenses for the period April 2009 to March 2012. Following the decisions of Intercontinental (supra)....
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....o the consideration that has been paid by SSP on invoices raised by them. 5.2 It is submitted that from the MOU itself it is clear that apart from the agreed consideration, the appellant has received various services from SSP which are quantified by the department by adopting notional value; that the appellant ought to have included cost of these services also while arriving at the taxable value for discharge of service tax; and that as per Section 67 (1) (ii), the cost of services provided over and above the amount of consideration has to be included in the taxable value. 5.3 The Ld. A.R submitted that the evasion of tax would not have come to light if the department had not gathered Intelligence that the Appellant have not discharged their Service Tax liability correctly on the Gross Amount received for providing the said Taxable Service to SSP and not furnished correct information in the prescribed Half- Yearly ST-3 Returns in contravention of the provisions of Sections 67, 68 & 70 of the Finance Act, 1994, read with Service Tax Rules, 1994. It was submitted that the following documents / details were suppressed by the Appellant till the date of issuance of letter C.No.IV/06/4....
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....unt of H.R.A. was ever paid to the assessee, the department cannot include the notional value of the free accommodation in the gross value so as to subject it to levy of service tax. The issue of limitation was also held in favour of assesse. The relevant paras read as under: - "7. To our opinion, consideration received against providing any service, i.e. as per explanation [to] Section 67, is something which include any amount payable for taxable services provided or to be provided. The bare reading makes it clear that in case any amount is payable qua to CISF the accommodation being provided to the security personnels that it shall be the consideration. If it is consideration, then only Rule 3 [of Service Tax (Determination of Value)] Rules will come into picture. But as observed by Commissioner (Appeals) vide the Order under challenge that there is no evidence on the point about any amount either in terms of HRA was ever paid to the respondent/CISF, the question of notional value of the free accommodation provided cannot form part of the gross value which has to be taxed under Section 67 of the Act. We therefore do not find any infirmity in the findings of Order under challeng....