TaxTMI 
TaxTMI 
2025 (7) TMI 280
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....t received for providing the said Taxable Service 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, fur....
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..... 1.8 In respect of Office accommodation, M/s Salem Steel Plant vide 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 ....
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....ioner of Central Excise, Salem vide Order-in-Original No. 68/2014 JC (ST) dated 11.12.2014, ordered invocation of extended time limit under proviso to Section 73(1) of the Finance Act, 1994 and confirmed the demand 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 considerat....
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.... of CISF personnel Salary and allowance; Pension and leave salary contribution Travelling and Daily Allowances Proportionate cost of raising and continuing training of personnel Supervision and monetary charges Cost of clothing Cost of Arms, ammunitions, equipment Any other charges especially 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 a....
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....le value. In no unclear terms the CBEC has clarified this aspect stating that the gross amount charged by such agency from their clients has to be taken as the value for the purpose of levy of service tax." In this regard, further reliance is placed on para 10 of the decision of Delhi High Court in Intercontinental Consultants & Technocrats Pvt. Ltd. V. Union of India wherein the Hon'ble Delhi Court in clear terms 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 con....
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.... including a situation where the same were incurred by the Appellant. The Hon'ble High Court of Delhi in the case of Intercontinental Consultants and Technocrats P. Ltd. v. Union of India (supra) held that the expenses which are in the nature of reimbursements cannot be included under the provisions of Section 67 of the Act. B. The cost of deployment is not "Consideration", but is in the nature of statutory fees. When the primary cost of deployment itself is not liable 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 on....
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....d judicial precedents. iii. It is submitted that if the Appellant is not granted the benefit of the judicial precedent, regard must be had to Rule 5(2)(i) of the Service Tax (Determination of Value) Rules, 2006 where the expenditure or costs incurred by the service provider is excluded from the value of the taxable service when the said service provider acts as a pure agent of the service recipient. Since the Appellant is pure agent for the limited purposes of Service Tax (Determination of Value) Rules, 2006, the reimbursement 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 mo....
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....n any taxable service with reference to its value, then such value shall,- (i) in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him; (ii) in a case where the provision of service is for a consideration not wholly or partly consisting of money, be such amount in money as, with the addition of service tax charged, is equivalent to the consideration; (iii) in a case where the provision of service is for a consideration which is not ascertainable, be the amount as may be determined in the prescribed 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 Ac....
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....Company v CCE reported at 1995 (78) ELT 401 (SC) and CCE v. Punjab Laminates Ltd. 2006 (202) E.L.T. 578 (S.C.). iv. Earlier audit conducted on the accounts of Appellant indicate lack of mala fides. An internal audit was conducted on 07.03.2013 for the period 02/2011 to 02/2013 and no such observation was made as to the inclusion of expenses incurred by the Appellant in the value of taxable services. Two audit paras for non-payment of interest and non-filing of ST-3 returns for the above period were raised for an amount of Rs.72,576/- which has been dutifully paid by the Appellant. v. The issue involves interpretation of law as evident from the fact that the issue of whether reimbursements can be taxed was referred to Large Bench 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 5....
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....ring that no amounts are paid to CISF, the question of notional value of the free accommodation provided cannot form the part of the gross value, and hence cannot be taxed (paragraph 7). Period involved: April 2009 - June 2012. 2 CISF v. CCE, Allahabad, [2019 (1) TMI 1661-CESTAT ALLAHABAD] Certain expenses incurred while receiving services, like Medical Services, expenses on vehicles provided, expenditure on Dog Squad, Stationery Expenses, Telephone Charges were incurred by AAI, and the question was whether it formed part of consideration. Followed Union of India v. Intercontinental Consultants and Technocrats Pvt. Ltd. 2018 (3) TMI 357- Supreme Court (supra) to hold that the expenses are not to be included in the assessable value, and that only such consideration as received by the service provider are to 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 impr....
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....the Department as no revenue appeal has been preferred by the Department. In other words, the view taken in the above decisions have attained finality, and it is for this reason, the principles contained therein merits to be applied to the instant case squarely. 4.4 She has put forth that the present appeal merits to be allowed and the demand be set aside following the covered decisions standing in favor of the Assessee, whereby the issue has attained finality. Thus, she has prayed for setting aside the impugned Order-in-Appeal No. 36/2015 dated 19.03.2015. 5.1 The Ld. Authorized Representative Ms. O.M. Reena appeared and argued for the department. The Memorandum of Understanding entered into between the appellant and M/s. SSP was adverted to by the Ld. A.R to submit that it would be clear from the MOU that the appellant has received services in addition to 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 ha....
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....nt of certain expenses incurred by them. It is not in dispute that the appellant has discharged service tax on the consideration received for providing security services. In addition to the said consideration for security services provided by the Appellant, they have also received certain services (facilities) from SSP in the nature of rent-free accommodation, rent free office premises, electricity/water charges, supply of vehicles, supply of fuel, provision of medical treatment, supply of forms and stationery. In the agreement (MOU) between the Appellant and SSP, the cost of these services are not quantified. The Department has raised demand adopting notional value for such services. 8.2 We note that the Tribunal has considered the very same issue in CGST, CCE Dehradun Vs. Commandant CISF Unit (supra). It was held that when there is no evidence forthcoming from the records that the amount 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....
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....re incurred by the Airport Authority of India to whom CISF was providing security services. The Tribunal held that such services are in the nature of reimbursable expenses. Following the judgment of Hon'ble Supreme Court in the case of UOI Vs. Intercontinental Consultants and Technocrats Pvt. Ltd. [2018 (3) TMI 57 - SUPREME COURT], the demand was set aside. 8.4 In the case of M/s. Central Industrial Security Force (CISF) Vs CST Pune (supra) as well as in the case of Sr. Commandant Central Industrial Security Force Vs CC & CE Bhopal (supra), the Tribunal had held the issue in favour of the assessee and set aside the demand. In the present case, the demand has been made in relation to (i) pension from December, 2010, (ii) miscellaneous expenses, (iii) medical facilities, (iv) transportation and (v) cost of accommodation- office and residential. Insofar as (ii) miscellaneous expenses, (iii) medical facilities, (iv) transportation and (cost of accommodation- office and residential are concerned, the same are merely facilities and conditions of contract, and is not forming part of the consideration. Insofar as pension is concerned, there has been no payment made to that effect from D....