Custom, Excise & Service Tax Tribunal
Indian Oil Corporation Limited vs Ce & Cgst Noida on 19 July, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Service Tax Appeal No.70334 of 2016
(Arising out of Order-In-Original No. 34-COMMR-NOIDA-I-2015-16, dated -
28/01/2016 passed by Commissioner, Central Excise, Noida-I)
M/s Indian Oil Corporation Limited .....Appellant
(Pipelines Division, A-1, Sector-1, Udyog Marg
Noida, UP 201301)
VERSUS
Commissioner, Central Excise & Service Tax, Noida-I
....Respondent
(C-56/42, Renu Tower, Sector-62 Noida, U.P.-201309) APPEARANCE:
Shri Atul Gupta, Advocate & Ms. Aayushi Srivastava, Advocate for the Appellant Shri Santosh Kumar, Authorized Representative for the Respondent CORAM: HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL) HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) FINAL ORDER NO.-70640/2024 DATE OF HEARING : 19.07.2024 DATE OF DECISION : 19.07.2024 P. K. CHOUDHARY:
The present Appeal has been filed by Indian Oil Corporation Ltd1 against Order-in-Original No. 34/Commissioner/Noida-I/2015-16 dated 28.01.2016.
2. The facts of the case in brief are that the Appellant is carrying out activities such as refining, pipeline transportation and marketing of petroleum products, exploration & production of crude oil and gas, marketing of natural gas & petrochemicals. The Appellant have sent the officers/employees on deputation to Ministries & Departments of the Government of India and 1 The Appellant 2 Service Tax Appeal No.70334 of 2016 receives amounts, which are exactly equal to the amount paid as salaries and other allowances to the employees deputed by the Appellant to Ministry/Government Department. The amounts so received were without any element of profit or service charge thereon and the said fact has not been disputed by the Department.
3. However, during the course of audit, an objection was raised by the Department with respect to the amount received by the Appellant from the Ministry for payment of salary to the employees on deputation and on the basis of the said audit the Department issued a Show Cause Notice2 dated 14.10.2014 to the Appellant by invoking the extended period of limitation and alleging that the amount received by the Appellant from the Ministry is in the nature of amount received for the services of 'Manpower Recruitment or Supply agency service' and hence service tax on the same is chargeable and recoverable from the Appellant. The said SCN dated 14.10.2014 also proposed to impose penalty unto the Appellant on the grounds that the Appellant has indulged in suppression of facts with intention to evade payment of duty as the Appellant has not disclosed the receipt of the said amount in his ST-3 returns.
4. The Appellant filed reply to the SCN. The said SCN was adjudicated vide Order-in-Original dated 28.01.2016 whereby the Commissioner has confirmed the demands proposed in the SCN along with confirming the penalty upon the Appellant. Being aggrieved, the Appellant has filed the present appeal before the Tribunal.
5. Heard both the sides and perused the appeal records.
6. Learned counsel for the Appellant has made the following submissions:
a. That the Appellant has not received any profit or service charge over and above the amount received as 2 SCN 3 Service Tax Appeal No.70334 of 2016 reimbursement and thus such reimbursement does not be subjected to service tax in terms of Section 67(1)(i) and the Rule 5 of the Service Tax Rules as interpreted by the Hon'ble Supreme Court in Union of India v.
Intercontinental Consultants and Technocrats Pvt. Ltd., (2018) 4 SCC 669;
b. That in the present case, the demand of service tax is computed on the salaries and allowances paid to the employees. Assuming without admitting that service is provided by the Appellant to the Ministry, it cannot be said that the value of consideration for that service is the amount of salaries paid to the deputed employees. It is submitted that salaries which are reimbursed, cannot be taken as consideration paid to the Appellant for provision of service and thus, demand of service tax on such reimbursable amounts is untenable;
c. That the Commissioner, Central Excise and Service Tax, Delhi, has decided the same issue in favour of the Appellant vide Order-in-Original No. 03/PK/GST/DE/2018- 19 dated 29.05.2018 by placing reliance on Union of India v. Intercontinental Consultants and Technocrats Pvt. Ltd., supra. The Order dated 29.08.2015 has been passed in the Appellant's sister company namely, M/s Indian Oil Corporation Ltd., Refineries Headquarters, Scope Complex Core-2 & 7, Industrial Area, Lodhi Road, New Delhi;
d. That the Department has not contested the above referred Order dated 29.05.2018 in any form or manner and therefore, the said finding is deemed to be admitted by the department;
e. as per the definition of the taxable service during the relevant period, the activity of the Appellant did not fall within the scope of 'Manpower Recruitment or Supply 4 Service Tax Appeal No.70334 of 2016 Agency Service' as the appellant is not a manpower recruitment and supply agency;
f. That the Appellant is not an agent providing any service to the Ministry of the nature which can be said to be a service in relation to the recruitment or supply of manpower to the client. It is pertinent to note that all these organizations or bodies are a part and parcel of the Ministry and have no separate identity or existence. These organizations or bodies have been formed to assist the Ministry in formulating and giving shape to various policies of the Government and implement the same through administrative and executive orders, thus, the Appellant was not providing any service;
g. That the Appellant was of the bona fide belief that the activities carried out by them are not liable to service tax and in many cases considering the same issue it has been held as the confusion was prevalent on the interpretation, therefore, the extended period of limitation is not invokable;
h. That the demand is not sustainable, therefore, no penalty is imposable on the Appellant.
7. Learned Departmental Representative appearing on behalf of the Revenue has reiterated the findings given in the Order-In- Original.
8. We find that undisputedly, the Appellant has not received any amount over and above the reimbursement against the deputation of the officers/employees and thus such amount was not subject to service tax. The Hon'ble Supreme Court in the matter of Union of India v. Intercontinental Consultants and Technocrats Pvt. Ltd., supra has held that reimbursement of expenses are not subject to service tax. The Hon'ble Supreme Court has held as follows:
"Realising that Section 67, dealing with valuation of taxable services, does not include reimbursable expenses for providing 5 Service Tax Appeal No.70334 of 2016 such service, the Legislature amended by Finance Act, 2015 with effect from May 14, 2015, whereby Clause (a) which deals with 'consideration' is suitably amended to include reimbursable expenditure or cost incurred by the service provider and charged, in the course of providing or agreeing to provide a taxable service. Thus, only with effect from May 14, 2015, by virtue of provisions of Section 67 itself, such reimbursable expenditure or cost would also form part of valuation of taxable services for charging service tax."
9. We further find that the department not contesting the Order-in-Original No. 03/PK/GST/DE/2018-19 dated 29.05.2018 also supports the contention of the Appellant. The relevant observation made in the Order-in-Original No. 03/PK/GST/DE/2018-19 dated 29.05.2018 is reproduced hereinunder:
"Since, the Noticee has received reimbursement of salary and other allowances and no additional mark- up has been received by them, it is observed that no consideration is received by the Noticee for providing 'Manpower Recruitment or Supply Service'. Thus, all such reimbursement recovered by the Noticee from other organizations is not taxable in the light of the Apex court decision supra. Thus, the Service Tax demanded under 'manpower recruitment or supply service' is not sustainable."
10. In view of the above, without going into other submissions of the Appellant, the impugned order is set aside and the Appeal is allowed with consequential relief, if any, as per law.
(Operative part of the order pronounced in open court) (P. K. CHOUDHARY) MEMBER (JUDICIAL) (SANJIV SRIVASTAVA) MEMBER (TECHNICAL) Nihal