T.K. Jayaraman, Member (T)
1. In terms of the impugned order, the appellants are required to pre-deposit amount of Rs. 37,24,912/- and various penalties under Section 76, 77 and 78 of the Finance Act, 1994.
2. The dispute is with regard to the valuation of security services provided by the appellants. The appellant provide Security personnel is to various clients including the official liquidator. As far as the liability of providing services to official liquidator is concerned, in view of the Hon’ble Allahabad High Court, the official liquidator was directed to pay the service tax to the Government without intervention of the appellant, that liability comes to Rs. 14.7 lakhs. The learned DR stated that they have information that this part of this amount will be paid by the official liquidator.
3. Be that as it may, the learned advocate stated that in terms of Section 67 of the Finance Act, 1994, the valuation of taxable service would be only on the gross amount received by the service provider for the services rendered by him. He contended that the reimbursement on account of various factors cannot be charged to service tax. He derive support from a number of decisions of the Tribunal which relate to various other services. However, he urged that the principle is one and the same and various Board’s Circulars and decisions of the Tribunal held that service tax is leviable only on the amount received for the services rendered and not on various types of reimbursement for other purposes.
4. On the other hand, the learned DR stated that the case law relied on by the learned advocate pertaining to various other services and they cannot be directly applied to the facts of the present case. He invited our attention to the following decisions:
1. New Industrial Security Force v. CCE, Kanpur 2006 (3) STR 197 (Tri-Del)
2. Panther Detective Services v. CCE, Kanpur 2006 (4) STR 116 (Tri-Del)
3. Punjab Ex-Servicemen Corporation 2007 (5) STR 214 (Tri-Del)
5. The learned advocate pleaded financial hardship. However, he argued on limitation also. The appellants were filing the returns right from 1999 and the Department took no action to verify the facts. In view of various decisions, the appellants were under the bonafide belief that the reimbursement of the salary of security person was not liable to service tax. Moreover, the appellants have not collected the service tax from their clients and the amount received on account of salary has been paid to the personnel. The deposit of entire amount would cause extreme hardship to them. In this connection, he relied upon the decision of the Apex court from the Continental Foundation Jt. Venture v. CCE, Chandigarh wherein the proviso to Section 11A was interpreted by the Court and urged that extended period can not be invoked.
6. On a very careful consideration of this issue, we find that this matter of valuation of services in respect of security agency services was gone in depth in cited Tribunal’s decisions. In such circumstances we cannot say that the appellants have prima facie a strong case on merits. However, taking into account the fact that they had already deposited an amount of Rs. 2.6 lakhs and also that the official liquidator had deposited some amount, we are of the view that the appellants should deposit an amount of Rs. Seven lacs within a period of eight weeks for purposes of Section 35F. On deposit of such amount, the balance amount of service tax and penalties stand waived till the disposal of appeal. Compliance to be reported on 21.4.08.
(Dictated in the open Court)