TaxTMI 
TaxTMI 
2025 (11) TMI 123
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....No/date 1 ST/42319/14 MMR& BAS April 2004 to March 2008 April 2008-to March 2009 24,93,989/- (Rs.18,49,747 apprtd) & Rs 2,96,055 Rs 2,27,849 & 1,31,435 200/2014dt 23.07.2014 100/2010 dt 31.08.2010 29/09 dt 26.08.2009 2 ST/42329/15 Security Agency Service Oct 2004 to Sept 2009 6,11,003 186/2015 dt 06.08.2015 148/2011 dt 14.12.2011 284/2010 dt 20.04.2010 3 ST/41717/16 Various services prior to 1.7.2012 April 2011 to March 2012 5,54,980/- Tax Rs.55,498 Penalty 75/2016 (STA-II) dt 14.06.2016 60/2015- 16 dt 22.01.2016 SOD No 66/2013 dt 21.04.2009 4 ST/40453/15 MMR & BAS April 2009- March 2010 Rs.1,50,895/- under MMR and Rs 77,047/- under BAS 02/2014 dt 01.12.2014 13/2011 dt 08.02.2011 55/2010 dt 16.09.2010 5 ST/42292/15 MMR & BAS 1.4.2010 to 31.03.2011 Rs.3,55,214/- under MMR Rs 1,83,00 BAS 172/2015dt 03.08.2015 75/2013dt 31.03.2013 316/2011dt 09.09.2011 6 ST/41569 to 41572/17 (4 Appeals) i) MMR i )MMR iii) MMR iv) MMR i) April 2012 to June 2012 ii) July 2012 to March 2013 iii) April 2013 to March 2014 iv) April 2014 to March 2015 i) Rs....
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....clients towards security/cleaning service: provided by them during period from October, 2004 to September, 2009 but had not paid service tax thereon amounting to Rs 6,11,003 Hence, a Show Cause Notice No. 284/2010 dated 20.04.2010 was issued to them. The learned adjudicating authority after due process of law passed the Order-inOriginal No. 148/2011 dated 14.12.2011 (i) confirming the demand of service tax under Section 73 of the Act (ii) along with appropriate interest under Section 75 the Act and (iii) imposed penalties under Section 77 & 78 of the Act. 3.2 When the appellant filed an appeal before the Commissioner (Appeals II), Chennai after due process of Law upheld the Order-in Original. 3.3 Once again aggrieved, the Appellant approached this Tribunal in Appeal vide Service Tax Appeal No ST/42329/15. 4. Subsequently involving the same issues, the Department issued periodical SCN's/SOD's demanding service tax along with applicable interest and proposals for imposition of penalties. After due process of law, the respective adjudicating authorities confirmed the demands of service tax along with interest and imposed penalties. Aggrieved by these orders in original, the a....
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....the activity takes place only when the customers intend to buy the financial product and the bank agrees to provide the product on satisfaction of conditions. 5.4 The appellant has submitted that the SCN was barred by limitation (wherever extended period invoked) and that there was no reason for the department to invoke extended period of limitation since there is no suppression or fraud or any other ingredient mentioned in the Section. 5.5 For the period 2006-07 and 2007-08 the Appellant had paid service tax under Security Agency Services and Cleaning services a sum of Rs.16,38,056/along with interest of Rs.2,11,691/- prior to the issuance of SCN 5.6 From 2008 onwards the Appellant has been discharging service tax and the Show Cause Notices have been issued demanding Service Tax on the electricity charges paid by the Appellant and reimbursed by the flat owners which needs to be excluded, as reimbursements are not taxable. 5.7 The Adjudicating Authorities have confirmed the demand along with interest and penalty on the ground that the services are classifiable under Management, Maintenance and Repair Services and that the Appellant is liable to pay service tax on electr....
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....ders. With regard to the issue of limitation, the Ld. AR submitted that the short payment or short reversal would not have come to light but for the investigation carried out by the Department. He has drawn our attention to Para 9(ii) Pg. 23 in respect of ST/42329/2015 where the Commissioner (Appeals) has held that the SCNs issued earlier were different and not on Security Services but regarding the non-payment of Service Tax on BAS. Therefore, the appellant is guilty of suppression of facts with an intent to evade payment of duty and justified invoking extended period. Finally, he submitted that there are no grounds for interference in the impugned order. 7. We have Heard both sides. Perused the appeal records as well as the case laws relied upon. 8. We now take up the issues one by one 8.1 It is essential first to look into the definitions of the Services discussed in the Impugned orders as follows: - A. Management, Maintenance and Repair Service: Section 65 (64) "management, maintenance or repair" means any service provided by- (i) any person under a contract or an agreement; or (ii) a manufacturer or any person authorised by him, in ....
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....o such sale or purchase of such goods or services; [(b) (c) excisable goods" has the meaning assigned to it in clause (d) of section 2 of the Central Excise Act, 1944(1 of 1944); "manufacture" has the meaning assigned to it in clause (f) of section 2 of the Central Excise Act, 1944(1 of 1944)] C. Section 65(94) "security agency" means any 2[person] engaged in the business of rendering services relating to the security of any property, whether movable or immovable or of any person, in any manner and includes the services of investigation, detection or verification, of any fact or activity, whether of a personal nature or otherwise, including the services of providing security personnel; From the internet definition, we find that an apartment maintenance is bundled service is a single, comprehensive package of services provided to upkeep a residential property, covering everything from cleaning and security to repairs, landscaping, and utility management. These bundled services, often part of housing society maintenance fees, are priced based on factors like property size or the number of facilities offered, with the goal of reducing costs, improving tenant....
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....s Auxiliary services on the Direct Selling agent Commission ii. The Commissioner of Customs, Central Excise & Service Tax (Appeals) in Para 8 rightly observed that charges paid for electricity consumption in units to EB was not taxable since the same was reimbursed to the Appellant by their clients. He has also observed in Para No. 8 of the Order-in-Appeal that to that extent the taxable value is to be reduced. However, in Para No. 12, the Commissioner (Appeals) failed to mention the same and simply upheld the Order-in-Original dated 31.08.2010. On this count the Order-in-Appeal is erroneous and not maintainable iii. The Demand is hit by limitation of time as the ingredients set out in Section 73 of FA 1994 to invoke extended period are not existing in this case and cited several case Laws in their favour. iv. As regards BAS, a taxable service has to be provided to a client by any person in relation to business auxiliary services. There is no service provider- client relationship between Appellant and the bank and hence the definition of 'taxable service' itself is not applicable. 9.2 We find from the SCN, the Managing partner has furnished the....
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....provided by the Appellant. To that extent the taxable value is reducible. However, in the operative portion of his order, the LAA has upheld the Order-in-Original which in our view is an apparent mistake while concluding the Order. However, we do not go into the issue once again as it has been already held after detailed discussion and analysis that the electricity charges are not includible. We set aside the order of the Lower Appellate Authority in this Regard and Allow the Appeal on the exclusion of electricity charges as claimed by the Appellant. However, this exercise requires Arithmetical calculations and in the absence of the same in the Appeal records, we are unable to do so. We remand this portion of the order for taking into the observation of the LAA in the impugned order and re-compute the demand. 9.7 We find that the demand of service lax on sales commission under the category of BAS service, is unambiguously clear that commission paid to sales agents is taxable under the category of BAS. This aspect has been discussed in detail in the Impugned Order. The expenses incurred for procuring viable clients cannot be adjusted against the consideration, treating part of....
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..... 6.2 Similar is the situation in the transaction between a service provider and the service recipient. Only when the service recipient has an obligation legal or contractual to pay certain amount to any third party and the said amount is paid by the service provider on behalf of the service recipient, the question of reimbursing the expenses incurred on behalf of the recipient shall arise. For example, when rent for premises is sought to be claimed as reimbursement, it has to be seen whether there is an agreement between the landlord of the premises and the service recipient and, therefore, the service recipient is under obligation for paying the rent to the landlord and that the service provider has paid the said amount on behalf of the recipient. The claim for reimbursement of salary to staff, similarly has to be considered as to whether the staff were actually employed by the service recipient at agreed wages and the service recipient was under obligation to pay the salary and it was out of expediency, the provider paid the same and sought reimbursement from the service recipient." 9.8 When Sri Vijai Kumar, partner was, enquired, he in his statement dated 10/06/2008....
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....tions are rightly classified under BAS in the impugned order and we uphold the decision. 9.13 Limitation and penalty - The Appellant contended that extended period is not invocable. None of the ingredients that are required for invoking the extended period are present. The Appellant relies upon the following decisions wherein it has been held that the expression 'suppression' has been used in the proviso to Section 11A of the Act accompanied by very strong words as 'fraud' or 'collusion' and therefore has to be construed strictly. It has also been held that when a notice is issued for subsequent period for the same issue, extended period cannot be invoked as the department is already aware of the details. The Appellant placed reliance on the following case Laws: i. M/s. Continental Foundation Joint Venture Vs. CCE (2007) 216 ELT177 ii. Pushpam Pharmaceuticals Company Vs Collector of C. Ex. Bombay (1995) 78 ELT401 iii. Collector of Central Excise Vs. Chemiphar Drugs & Liniments Ltd (2002) TIOL 266 iv. Nizam Sugar Factory Vs Collector of Central Excise (2006) 197ELT465(SC) v. ECE Industries Ltd vs. CCE (2004) 164....
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....service tax on the charges collected towards maintenance and repair of goods or things in the building/complex occupied by their tenants, and therefore, the argument that the case of interpretational issue does not hold water. In view of the same I am not inclined to accept the argument of the assessee that penalty under Section 76 and 78 of the Act, is not to be invoked as there is no reasonable cause for the non-payment o! service tax as envisaged in Section 80 of the Finance Act, 1994. Thus, once it is held that the assessee has suppressed the facts with intention to evade payment of service tax, penalty under Section 78 of the Finance Act, 1994 would be automatic and gets attracted. In this connection, I rely upon the decision of the Hon'ble Supreme Court in the case of Dharmendra Textile Mills and Rajasthan Spinning & Weaving Mills. As regards the proposal for penalty under Section 76, I am of the opinion that the imposition of penalty under Section 78 would itself meet the ends of justice and, therefore, penalizing them under Section 76 may not be warranted further in respect of the demands made in the Show Cause Notice No. 16/2009 dated 21.04.2009. However, I impose appr....
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....lished in this case. We have gone through the impugned orders/OIO and we have no reason to differ from the above findings and we are in total agreement with their findings. 9.17 Further, we find that the first SCN covered in the impugned order is issued invoking the extended period and the second SCN was issued under Normal period only on the same set of facts for the further period. In view of our above findings, we have no hesitation in holding that extended period is rightly invoked in this case and Penalties imposed under Section 77 and 78 for the First SCN and under Section 76 for the demand covered under SECOND SCN is in order. 9.18 Therefore, we have no hesitation in holding that invocation of extended period and imposition of penalty as above is justified. 9.19 The Appellant also sought for the benefit of Section 80 of the Finance Act as amended which provides that notwithstanding anything contained in the provision of Section 76, Section 77 or Section 78 no penalty shall be imposed if there is reasonable cause for the failure to pay tax. In the instant case the Appellant has discharged service tax under security and cleaning services. 9.20 According to Section ....
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....st under Section 75 the Act and (iii) imposing a penalty under Section 77 & 78 of the Act. 10.2 Aggrieved by the impugned order: the appellant filed this appeal before the Commissioner (Appeals) Chennai. The Commissioner (Appeals) Chennai after due process of Law upheld the OIO on merits and rejected Appeal on the grounds of time bar in filing the Appeal. 10.3 Once again, aggrieved, the Appellant filed this Appeal before this Tribunal. 10.4 The Ld. Advocate Ms. Radhika Chandrasekhar appeared for the Appellant and the Ld. Authorized Representative Mr. M. Selvakumar Appeared for the Respondent/Department. 10.5 The Ld. Counsel for the Appellant submitted as follows: - i. In Show Cause Notice No. 284/2010 dated 20.04.2010 (ST/42329/15) the department proposed to demand Service Tax under 'Security Agency Services' for the period from October 2004 to September 2009 though it was already considered as a part of a composite service of Management Maintenance and Repairs and demanded under different SCNs issued. ii. It is relevant to state that for the period of dispute in SCN No. 284/2010 dated 20.04.2010 (ST/42329/15), the Appellant has discharged serv....
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.... [2008 (226) E.L. T. 164 (S.C.)] vii. Finally, she requested to consider the above submissions and allow the Appeal on the grounds of merit as well as limitation. 10.6 Per Contra, the Ld. Departmental Authorized Representative Mr. M. Selvakumar appeared on behalf of the Respondent and reiterated the contentions made in the Order-in-Original and Order-in-Appeal and this is a clear case of outright Non-payment of Tax by suppressing the facts from the Department and extended period is invokable in this case. With regard to the issue of limitation, Ld. AR submitted that the short payment or short reversal would not have come to light but for the interference of the Department. Therefore, the appellant is guilty of suppression of facts with an intent to evade payment of duty. Therefore, he argued that there are no grounds for interference in the impugned order. 10.7 We have heard both the sides. 10.8 The following issues arise for our consideration in this case as to: - i. Whether the LAA has erred in holding the management, maintenance and repair services as security agency services resulting in overlapping demand ie whether the demand under MMR and Securi....
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....lant is rendering composite services (Para 9). From the SCN we find that the services rendered by the Appellant are a) security to the building, (b) Housekeeping of the building, (c) Electrical Services, (d) plumbing Services, (e) Gardening, (f) Operation of the sewage treatment plant and swimming pool and (g) Preventive maintenance of lifts, plant and machinery etc. The contract price is Rs 0.93 paise per sq ft for a total area of Rs 1,42,437 Sq Ft inclusive of service Tax and the Ledger and P& L Account shows receipt of income under "Maintenance". Further the contract is a composite one and cannot be vivisected. Security services are already covered in our earlier order in Appeal Nos ST/42319/14 that it is part of the composite contract of maintenance of Apartments and the price cannot be vivisected. 10.15 The Appellant disputed that the charges were not Security Agency Services and that they have documentary evidence to prove item wise charges. 10.16 The Appellant submitted that the demand overlaps with the demand already made under MMR Services for which detailed submissions have been made in Appeal ST/42319/14. 10.17 Further the Appellant submitted that in their Ap....
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.... 10.19 We also find that Security services have been included in the composite service of MMR Service and extended period has been invoked in Appeal No. ST/42319/14. Therefore, a second demand for the same service and same period cannot be allowed under Extended period under the name of Security agency service which was already covered by us in our decision in Appeal No ST/42319/ST IN Para 9. 10.20 Further it was submitted by the Appellant that It is trite law, that there cannot be two SCNs for the same period and the same service and placed Reliance on CCE Vs. India Thermit Corporation [2008 (226) E.L.T. 164 (S.C.)]. 10.21 We have perused the above decision and the same is squarely applicable in this case. Therefore, the demand under Security Agency service is required to be set aside being a repeated demand and being already covered under MMR Services for the similar period. 10.22 Further, extended period is not invocable as none of the ingredients that are required for invoking the extended period are present. The Appellant relied upon the following decisions wherein it has been held that the expression 'suppression' has been used in the proviso to Section 11A o....
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....quent period and/or it cannot be taken into consideration as it is not known when that Show Cause Notice was dropped. If the Department wanted to take up such contentions it is for them to show that that Show Cause Notice was not relevant and was not applicable. The Department has not brought any of those facts on record. Therefore, the Department cannot now urge that findings of the Collector that that Show Cause Notice was on a similar issue and for an identical amount is not correct." 10.24 It is clear from the above case Laws that once a demand has been issued on the same grounds invoking extended period of limitation, then issuing second demand on the same set of facts is not maintainable. We have perused the aforesaid case Laws, and the ratio decidendi of the above decisions are squarely applicable in this case and we respectfully follow the same. 10.25 Therefore, we hold that the demand issued in this case is hit by limitation of time, and also on the fact that as it overlaps with the demand made under MMR service, the demand under Security agency service fails to survive on merits as well as limitation. We set aside the impugned order and allow the Appeal with consequ....
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....6 The Ld. Counsel for the Appellant submitted that the order of the Commissioner of Central Excise (Appeals) is not sustainable for the following reasons: a) In Para No.3 of the Show Cause Notice it was recorded that the Appellant has received electricity charges and the same has not been included in the taxable value. The Service Tax (Determination of Value) Rules, 2006 provides for levy of service tax on the gross amount. b) The Deputy Commissioner of Service Tax in page No. 12 Para No.18 has held that the electrical charges as well as charges towards electricity related works are liable to be included in the taxable value. c) The Commissioner of Central Excise (Appeals) has given a finding that the Appellant has not reimbursed electricity charges and the entire amount pertains to electrical work. This observation is contrary to the Show Cause Notice and Order in Original. d) Both the Show Cause Notice and Order in Original invoked provision of Service Tax (Determination of Value) Rules, 2006 to include the electricity charges. e) If the charges are related to electrical work, the question of determination of value does not arise. The ....
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....ervice Tax is not leviable on electricity charges as they are reimbursements. Therefore, the demand on MMR is payable after deducting the value of electricity charges. 11.12 In respect of Commission received from Banks/Financial Institutions for marketing their financial products, this is an already decided issue in Appellants own case by this Bench in Appeal No ST/42319/14 in this clubbed Appeal. Applying the same ratio, we hold that Service Tax is payable under Business Auxiliary services. 12.1 As Regards Appeal No. ST/42292/15, the facts are slightly different. The demands in respect of MMR and BAS are upheld as done by us in Appellant's own Appeal in ST/42319/14. The only distinguishing factor is the nature of electricity charges. The Appellant's submission is that that it is electricity charges that are reimbursable and so excludible. 12.2 Whereas in the Department on the other hand contends that the Appellant is under the obligation to bear the electricity expense up-to Rs.11,000/- and the balance would be reimbursed without appreciating that the Appellant being a service provider has no obligation to bear any expenditure from their pocket and that the Commissioner o....
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....ise. 13.3 As the first question is answered in favour of the Appellants, there is no requirement to visit the second and third question framed by us. 13.4 The Appeal is allowed with consequential benefits as per Law. 14. Appeal Nos. ST/41569/17 to 41572/17: 14.1 These Appeals have been filed by the Appellant against the confirmation of demand on electricity charges without giving the benefit of deduction of reimbursable electricity charges under MMR Services. 14.2 The Appellant contended that they have discharged service tax on the taxable value as determined under Section 67 of the Finance Act, 1994 as amended. The Appellant paid the electricity charges to the Tamil Nadu Electricity Board and subsequently recovers the same. The Appellant did not include the electricity charges reimbursed, since electricity per se is goods and therefore not liable to service tax. Further the charges towards electricity recovered from the flat owner and paid to electricity Board is not a consideration for providing taxable services. 14.3 The brief facts as culled out from the impugned order are that the Appellants are providers of Security Service and Maintenance of Flat Service et....
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....e 4 SOD/SCN's were issued by the Department. Further, a similar issue was decided in the SOD preceding the present impugned order which was decided by us in favour of the Appellant i.e. APPEAL No. ST/41717/16 relying upon Appellants own case in the present clubbed Appeals, Appeal Nos. ST/42319/14 and ST/40453/15. The Appellant has relied upon several decisions in support of their claim. Based on the ratio of the above decisions, we have no hesitation in holding that electricity charges are not includible under the category of MMR Services and set aside the demand. As the demand of Tax fails, the consequent interest and penalty automatically get extinguished. Therefore, the present Appeals ST/41569/17 to ST/41572/17 are allowed with consequential benefits. 15. Finally, we sum up the entire proceedings as follows: - Sl. No. CESTAT Appeal No Issue Period Amount (Rs) Decision 1 ST/42319/14 Security Agency &Cleaning Serv Before negative list April 2004 to March 2008 April 2008-to March 2009 24,93,989/- (Rs.18,49,747 apprtd) & Rs.2,96,055 Rs.2,27,849 & Rs.1,31,435 Demand under MMR & BAS confirmed. Electricity charges are permitted to deducted fro....