Custom, Excise & Service Tax Tribunal
Bombay Intelligence Security (I) Ltd vs Commissioner Of Service Tax, Mumbai-Ii on 29 January, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. ST/275/2011-Mum. ST/CO-99/2011-Mum. and Appeal No. ST/85626, 85627, 85633, 85713, 86826, 86827/2013-Mum. (Arising out of Order-in-Original No. 02/ST-II/KKS/2011 dt. 31/01/2011, 35-37/ST-II/RS/2012 dt. 12.11.2012 passed by the Commissioner of Service Tax, Mumbai-II ) For approval and signature: Honble Mr. S.S. Kang, Vice President Honble Mr. P.K.Jain, Member (Technical) ============================================================
1. Whether Press Reporters may be allowed to see :
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy :
of the Order?
4. Whether Order is to be circulated to the Departmental :
authorities?
=============================================================
Bombay Intelligence Security (I) Ltd.
:
Appellant
Vs.
Commissioner of Service Tax, Mumbai-II
Bombay Intelligence Security (I) Ltd.
Vs.
Commissioner of Service Tax, Mumbai-II
:
Respondent
Appearance
Shri Hari Shankar, Advocate for Appellant
Shri K.M. Mondal Consultant for respondent
CORAM:
Mr. S.S. Kang, Vice President
Mr. P.K. Jain, Member (Technical)
Date of hearing : 29/01/2014
Date of decision : /04/2014
ORDER NO.
Per : P.K. Jain
In this order seven appeals are being disposed of.
2. Appeal No. ST/275/2011-Mum. is arising out of order dt. 31.1.2011 and is filed by the appellant/assessee. The dispute in this appeal pertains to the period 1st February 2001 to 30th September 2004. Cross-objection has been filed by Revenue in this appeal.
3. Remaining six appeals are against the order dt. 12.11.2012. Out of these six appeals three are filed by the Revenue (ST/85713/13-Mum., ST/86826/13-Mum., ST/86827/13-Mum.) and remaining three appeal are filed by appellant/assessee (ST/85626/13-Mum., ST/85627/13-Mum., ST/85633/13-Mum.). Dispute in these appeals pertains to the period October 2004 to March 2011.
4. The appellant/assessee is engaged in providing various services which includes Security services, House Keeping Services, Fire Fighting Services, Utility Services, Customer care Services, Liftmen Service, Attendants, gardening, receptionist, management facilities, Cleaning services etc. The issues involved in the appeal ST/275/2011-Mum. and the remaining six appeals are over lapping and have implication on the six appeals and are therefore being taken up together.
5. ST/275/2011-Mum.
Revenue took up the investigation against the appellant/assessee. Investigation which were extended to around 422 clients/customers of the appellant. After recording statement of 22 customers and procuring various documents from the 422 customers, as also documents recovered during the searches at the appellant/assessee premises, a demand notice amounting to Rs.2,04,62,708/- was issued on 21.4.2006 covering the period 1.2.2001 to 30.9.2004. This demand notice invoked the extended period of limitation. The case was adjudicated by the Commissioner vide impugned order dt. 31.1.2011 wherein the adjudicating authority confirmed the entire demand and penalty of equivalent amount under Section 78 was also imposed. Appellant/assessee is before us against the said order.
6. Learned advocate for the appellant/assessees main contention is that the statement of only 22 clients of the appellant were recorded while in respect of the remaining 400 evidence in the form of only documents were available. Learned advocates main grievance is that the documents in respect of said 422 clients though constituted serial No.50 of Annexure B of the list of relied upon documents, however, the same were not given to them before passing the impugned order. These documents were made available to them only on 27.4.2011 i.e. after passing of the impugned order. Learned Advocate also claimed that many of these documents indicate that the services were non-security services. Learned Advocate for the appellant/assessee also contended that another document on which the department is relying is the Minutes of the meeting held by the appellant/assessee with various officials of their establishments in different parts of the country. The contention was that these Minutes are not signed by any one and therefore cannot be relied. It was also contended that the minutes are of January 2004 while the period of dispute is from 2001 and thus these documents cannot be used for raising the demand particularly for the period February 2001 to December 2003, which are even otherwise barred by limitation. Learned Advocate also contended that the demand raised also includes the amount received by them from ONGC which were arrears of the services provided by them for earlier period.
7. Learned Special Counsel for the Revenue argued that all the relied upon documents were made available to the appellant before adjudication. The documents were again made available to them after passing of the order. In any case these documents are their own documents which have been procured by the Revenue from appellants clients. Learned Counsel also argued that even in the appeal they have not made out any case which would affect the decision arrived by the original authority. As far as the minutes of the meetings are concerned it is irrelevant whether these are signed or not. The fact remains that the minutes of the meetings were recovered during search operation from the appellant premises and they are not denying either the recovery of the said documents or the contents therein. Learned Counsel further argued that the content of the minutes is of a nature which would be applicable even for the earlier period. The Learned Counsel further argued that keeping in view the fact that the appellant has not correctly indicated the value of the service provided to their clients or in some cases even though security services were provided but no tax was paid indicate clear cut suppression of facts with willful intention to evade payment of duty and extended period have been correctly invoked. On the valuation aspect Learned Counsel stated that the valuation of the security service is well settled by the decision of the Honble Tribunal in the case of Punjab Ex-Servicemen Corporation Vs. CCE, Chanidgarh reported in 2007 (5) STR 214 (Tri.Del.) and the said decision of the Tribunal was based upon the Honble Madras High Court decision in the case of GDA Security Pvt. Ltd. Vs. Union of India reported in 2006 (2) STR 542 (Mad.). Learned Counsel also argued the fact that the ONGC is not paying service tax to them cannot be a reason not to collect the tax from the appellant. Appellant/assessee cannot absolve itself of its liability to pay tax. In view of this position there is no merit in the contention of the appeal filed by the appellant/assessee.
8. We have considered the rival submissions. We have also gone through the impugned order as also various evidences/arguments advanced by both sides. The main contention of the appellant/assessee is that they were not provided copies of the various document obtained from approximately 400-422 customers of the appellant. We find that these documents are relied upon documents. We note that the appellant has not stated in reply to the notice that they have not received said documents. Even during personal hearing no demand for getting the copies of these documents or non-receipt of these documents was ever made. There was a gap of five years between the issuance of the demand notice and adjudication of the case. During this entire period no such claim or demand about the documents was ever made. We also note that as per their own admission the copies of the documents have been received by them on 27.4.2011. In any case, even after receipt of the document, no meaningful case has been made before us so as to indicate that the conclusion reached in the impugned order will get amended. We also note that primarily these documents only indicate the correct invoice or the details of payment/charged made by appellant from their customer for the services. What has been shown by the appellant in the ST-3 returns and consequent service tax paid to the Government Exchequer is different . We therefore do not find any merit in the contention of the appellant. Another contention is that statement only in respect of 22 customers were recorded. In our view there is no need to record the statement of all the customers when the details are evident from the documents submitted by them. Appellant is not disputing the details given in the documents. This contention of the appellant is also rejected. Another contention of the appellant is relating to the valuation of security service. As pointed out by the learned Counsel for the Revenue, this issue is issue is already settled by this Tribunal in the case of Punjab Ex-Servicemen Corporation (supra), which was based upon the Honble Madras High Court decision in the case of GDA Security Pvt. Ltd. Vs. Union of India. We therefore reject the said contention. Section 67 of the Finance Act 1994, provides that for service tax purpose, gross amount charged will be the value. It is not in dispute that all the security guards were on the pay role of the appellant and various charges relating to provident fund, ESIC etc. were charged from their clients. We therefore find no merit in the said contention. As far as amounts received from ONGC is concerned, the fact that ONGC is not paying service tax to the appellant is of no consequence. As long as the appellant is providing the security service to ONGC, appellant is required to pay the said amount to the Government. Another contention is that some amount received from ONGC was relating to arrears. No details have been produced. The exact period to which the said amounts belongs and whether service tax has already been paid by the appellant on the said amount. Service tax is charged on receipt basis and security services were under tax net even before 2001. We also note that appellant was not declaring the value of the service tax correctly. It was based upon the painstaking exercise done by the Revenue covering 422 customers that the correct value of the services and the amount of service tax have been computed. This is a clear cut case of suppression of facts with willful intention to evade payment of duty. ST-3 returns filed during the period did not reflect the correct position. We, therefore hold that extended period of limitation is invokable in the facts and circumstances of the case. Similarly penalty under Section 78 of the Act is also imposable. We therefore dismiss the said appeal. Cross-objection are also disposed off.
9. ST/85626,85627,85633/-2013-Mum.
These appeals have been filed against the impugned order dt. 31.1.2011. The said order in turn covered three demand notices as under:
(i) Show cause notice dtd.23/4/2010 for the period October 2004 to March 2009 relating to Security Agency Services, Manpower Recruitment or Supply Agency Services, Business Support Services and Cleaning Activity Services.
(ii) Show cause notice dt. 15/10/2010 for the period April 2009 to March 2010 relating to Security Agency Services provided to SEZ and ONGC and Manpower Recruitment and Supply Agency Services to others.
(iii) Show cause notice dt. 21/10/2011 for the period April, 2010 to March, 2011 relating to Security Agency Services provided to SEZ and ONGC and Manpower Recruitment and Supply Agency Services to others.
The last 2 show cause notices were issued within the normal period of limitation, while the 1st Show cause notice was issued invoking the extended period of limitation.
In the impugned order the Commissioner has partly confirmed the service tax demand together with interest. The adjudicating authority has also held that the notice dt. 23.4.2010 except for the period October 2008 to March 2009 is barred by limitation as according to the adjudicating authority the extended period of limitation is not available to the department in the facts and circumstances of the case. Adjudicating authority found that there was no change in the nature of various services provided by the appellants during 2001-2011 and department has already issued demand notice on 21.4.2006 invoking extended period of limitation for the period April 2001 to September 2004 and hence second demand notice invoking extended period as not maintainable in law. Adjudicating authority also relied upon the Honble Supreme Court decision in the case of Nizam Sugar Factory Vs. CCE reported in 2006 (197) ELT 465 (S.C. . As far as the demand within the normal period of limitation in the three show cause notices dt. 23.4.2010, 15.10.2010, 21.10.2011 are concerned these were further examined and only a part of the demands were confirmed. Remaining demands were set aside on various grounds as detailed in the order. The main reason is that the department has issued the demand notices without examining the nature of services provided by the appellant/assessee. Department has not even examined whether the activities/services provided by the appellant/assessee are taxable or non-taxable and in case some of these are taxable under which category the same would fall. Commissioner found that in the first show cause notice dt. 23.4.2010 the allegation is regarding non-payment of service tax on Security Agency Services, Manpower Recruitment or Supply Agency Services, Business Support Services and Cleaning Activity Services in the second and third SCN, non-payment of service tax has been alleged in respect of the Security Agency Services provided by the notice to SEZ and ONGC and on the taxable services provided under the category of Manpower Recruitment or Supply Agency. The Commissioner also found that the Security Agency Service finds mention in the demand notices only with reference to services provided to ONGC and SEZ and there is no allegation regarding non-payment of service tax on security agency services and in respect of the rest of the demands covered by the three demand notices, the allegation is that the services on which noticee was not paying service tax by claiming them to be exempt or non-taxable, were classifiable as Manpower Recruitment or Supply Agency Services. It was also found that in the first show cause notice though mention has been made about the business support service and cleaning activity services, there is no particular quantification of tax in respect of the said services. Second and third show cause notice did not even speak of these two services. Commissioner observed that department has just taken the figures from the balance sheet and from the ST-3 returns and on the differential amount of service tax has been demanded as Manpower Recruitment and Supply Agency Service without going into the nature of the service (whether taxable or not), value of the service provided and the service tax payable. As far as security agency service provided to SEZ are concerned Commissioner observed that though the appellant had claimed exemption to services rendered to 791 SEZ unit but could submit certificates only in respect of nine units at the time of show cause. Appellant however produced copies of the approval certificate as SEZ Developer/SEZ Unit and the value of the services provided to SEZ unit or SEZ developers as certified by Chartered Accountant. Commissioner also observed that the demand notices had not quantified the demand in respect of the same. However, Commissioner accepted the certificate now produced and an amount of Rs.95,422/- was confirmed in respect of service provided to STEP unit namely Goa Scientific Centre. As far as security agency services provided to ONGC is concerned Commissioner agreed that the tax is payable and confirmed demand of Rs. 47,87,874/-. Similarly in respect of service tax on compensation/reimbursement received by the appellant/assessee Commissioner confirmed the service tax amounting to Rs.1,48,40,932/-. It was also found that the demand in the three notices are not in respect of the cleaning services however appellant/assessee admitted that they were providing cleaning service and not the Manpower Recruitment and Supply Service. Further appellant/assessee during the personal hearing before the Commissioner agreed to pay service tax amounting to Rs.3,59,53,895/- relating to cleaning service. Even though the demand raised in the show cause notice is not in respect of cleaning service but manpower supply service, Commissioner confirmed the demand relating to cleaning service as the appellant accepted that they were providing cleaning service and accepted the liability. Since the demand notice did not quantify about the said service the amount claimed by the appellant and duly certified by the Chartered Accountant was confirmed. Commissioner also accepted the appellants contention that the demand has been made on the gross turnover which is inclusive of service tax paid/payable which should have been excluded while computing the value of taxable service in respect of the amount relating to taxable activity. Commissioner also confirmed the interest liability in respect of the demand so confirmed. As far as penalties under different provisions of law are concerned no penalty was imposed under Section 78 penalty under Section 76 was not imposed in view of the Section 80 of the Finance Act. No penalty under Section 77 was imposed as the only lapse of the noticee is non-inclusion, by making an application in the category of cleaning service in their Service Tax Registration.
10. In the appeals filed by the Revenue as far as limitation is concerned the main contention of the Revenue is that the earlier show cause notice covered the period 1.2.2001 to 30.09.2004 and was on the ground of alleged evasion and non payment of service tax in respect of security service provided by it to ONGC whereas the show cause notice dt. 23.4.2010 was for Manpower Recruitment and Supply Agency Service, Business Support Service and Cleaning Services, in addition to security agency services and therefore it was incorrect on the part of the Commissioner to say that the facts disclosed in show cause notice dt. 23.4.2010 were already known to the department. Another contention was that the Manpower Recruitment and Supply Agency Service and Cleaning Activity service were brought into service tax net w.e.f. 16.6.2005 and appellant neither took registration nor discharged its tax liability and this clearly indicates intent to evade payment of service tax payable on taxable services provided by it. This fact have not been appreciated by the adjudicating authority. Another contention of the Revenue is that the adjudicating authority has failed to take into consideration the various documentary evidences like contract which were available before him to correctly determine the classification of the services rendered by the appellant. In the appeal four contracts have been cited to prove that they were providing manpower recruitment and supply agency service. As far as dropping the demand in respect of security agency services to SEZ unit or to developers of SEZ is concerned, the adjudicating authority has merely accepted the evidence in the form of Chartered Accountant Certificate in support of their claim. It was further stated that appellant have produced nine certificate issued to SEZ unit even though they were providing services to 791 SEZ units. Another contention is that the appellant has declared incorrect value in their ST-3 returns as compared to their Balance Sheet.
11. We have considered the submissions made by Revenue. The first issue is invoking the extended period of limitation. Demand notice dated 23.4.2010 invoked extended period of limitation as under:
As mentioned above, Noticee has not declared the total value in the ST-3 returns filed for the period Oct.2004 to March 2007. From April 2007 onwards they started showing the value of exempted services in the ST-3 returns, but failed to mention notification number in the ST-3 returns against the exemption claimed. Noticee was asked to furnish the notification number under which they had claimed the exemption and the documentary evidence of the value claimed for exemption. However, inspite of repeated reminders, till date. Noticee has not made available for documentary evidence in support of the exemption claimed. As such, there is reason to believe that they have suppressed the facts from the department and wrongly claimed exemption, without furnishing notification number, or producing documentary evidence in support of the exemption claim, to evade the payment of Service Tax. Therefore, the extended period of five years for demanding service tax under proviso to Sub-Section (1) of Section 73 of the said Act, read with Section 68 ibid and Rule 6 of the said Rules is invokable in this case.
11.1 In this context, findings of the Commissioner, are as under:
4.19. The notice has merit in pointing out that the same set of facts were before the Department in 2006 in respect of the period February 2001 to September 2004 are reproduced again in 2010 to allege suppression of facts in respect of the period 2004-05 to 2008-09. However, the noticee is not correct in contending that based on the same set of facts, the Department cannot seek to classify the subject services under a new and more appropriate category vis-`-vis the category under which it had been earlier classified by the Department. The notice is correct in contending that under the circumstances the department cannot again allege suppression or misdeclaration in the subsequent SCN issued on the same set of facts demanding service tax allegedly short paid during the further period. When the factum of non payment of service tax and the noticees reason for (i.e. stand on) the same, whether or not legally correct, are made known to the Department through action taken for an extended period of five years, for the subsequent period the issue becomes one of interpretation. If a notice is still not accepting the interpretation of the Department, action has to be taken by way of issue of SCN periodically within the period of limitation and not invoking extended period alleging suppression of facts.
4.20. Besides the above, in ST-3 returns filed by the notice for the period April 2007 to March 2009, they had claimed exemption of Service Tax on value amounting to Rs.1,59,28,00,017/-. This main ground of suppression of facts or misdeclaration mentioned in the SCN in respect of the service tax said to have been short paid/not paid during this period, is weak and untenable.
In the case of Nizam Sugar Factory Vs.CCE, AP, the Hon.ble Supreme Court observed as under:
?8.Without going into the question regarding Classification and marketability and leaving the same open, we intend to dispose of the appeals on the point of limitation only. This Court in the case of P & B Pharmaceuticals (P) Ltd. v. Collector of Central Excise reported in (2003) 3 SCC 599 = 2003 (153) E.L.T. 14 (S.C.) has taken the view that in a case in which a show cause notice has been issued for the earlier period on certain set of facts, then, on the same set of facts another SCN based on the same/similar set of facts invoking the extended period of limitation on the plea of suppression of facts by the assessee cannot be issued as the facts were already in the knowledge of the department. It was observed in para 14 as follows :
We have indicated above the facts which make it clear that?14. the question whether M/s. Pharmachem Distributors was a related person has been the subject-matter of consideration of the Excise authorities at different stages, when the classification was filed, when the first show cause notice was issued in 1985 and also at the stage when the second and the third show cause notices were issued in 1988. At all these stages, the necessary material was before the authorities. They had then taken the view that M/s. Pharmachem Distributors was not a related person. If the authorities came to the conclusion subsequently that it was a related person, the same fact could not be treated as a suppression of fact on the part of the assessee so as to saddle with the liability of duty for the larger period by invoking proviso to Section 11A of the Act. So far as the assessee is concerned, it has all along been contending that they were not related persons, so, it cannot be said to be guilty of not filling up the declaration in the prescribed proforma indicating related persons. The necessary facts had been brought to the notice of the authorities at different intervals from 1985 to 1988 and further, they had dropped the proceedings accepting that M/s. Pharmachem Distributors was not a related person. It is, therefore, futile to contend that there has been suppression of fact in regard M/s. Pharmachem Distributors being a related person. On that score, we are unable to uphold the invoking of the proviso to Section 11A of the Act for making the demand for the extended period. This judgment was followed by this Court in the case of ECE Industries Limited v. Commissioner of Central Excise, New Delhi reported in (2004) 13 SCC 719 = 2004 (164) E.L.T. 236 (S.C.). In para 4, it was observed :
In the case of?4. M/s. P&B Pharmaceuticals (P) Ltd. v. Collector of Central Excise reported in [2003 (2) SCALE 390], the question was whether the extended period of limitation could be invoked where the Department has earlier issued show cause notices in respect of the same subject-matter. It has been held that in such circumstances, it could not be said that there was any wilful suppression or mis-statement and that therefore, the extended period under Section 11A could not be invoked. Similarly, this judgment was again followed in the case of Hyderabad Polymers (P) Ltd. v. Commissioner of Central Excise, Hyderabad reported in [2004 (166) E.L.T. 151 (S.C.)]. It was observed in para 6 :
.......... On the ratio laid down in this judgment it must be held that once the earlier Show Cause Notice, on similar issue has been dropped, it can no longer be said that there is any suppression. The extended period of limitation would thus not be available. We are unable to accept the submission that earlier Show Cause Notice was for a subsequent 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. ?9.Allegation of suppression of facts against the appellant cannot be sustained. When the first SCN was issued all the relevant facts were in the knowledge of the authorities. Later on, while issuing the second and third show cause notices the same/similar facts could not be taken as suppression of facts on the part of the assessee as these facts were already in the knowledge of the authorities. We agree with the view taken in the aforesaid judgments and respectfully following the same, hold that there was no suppression of facts on the part of the assessee/appellant.
?10.For the reasons stated above, Civil Appeal Nos. 2747 of 2001 and Civil Appeal No. 6261 of 2003 filed by the assessees are accepted and the impugned orders are set aside on the question of limitation only. The demands raised against them as well as the penalty, if any, are dropped. The ratio of the aforesaid decision is squarely applicable to the facts of the instant case.
4.21. In view of the material facts and the reasons adduced by the noticee, I tend to agree with the plea of the noticee that there are no valid and sufficient grounds to sustain suppression of facts or will-full mis-declaration to evade payment of Service Tax and thereby invoking the extended period under proviso to Section 73(1) to demand Service tax. Consequently, the demand of Service Tax vide show cause notice dt. 23.04.2010 is sustainable only in respect of the normal period i.e. October 2008 to March, 2009.
4.22. There is nothing on record to prove that any details or clarification sought by the department in respect of services declared as exempted services has not been provided by the notice. I, therefore, agree with the claim of the notice that demand of Service Tax for the extended period under proviso to Section 73(1) on the ground of mis-declaration or suppression is not on fcts and law sustainable.
In view of the foregoing, I hold that on limitation itself the demand of Service Tax made in the Show Cause Notice dated 23.04.2010 is not sustainable for the period October 2004 to September 2008. The demand of Service Tax made under this Show Cause Notice so far as it relates to the period October 2008 to March 2009 is sustainable on limitation.
11.2 Extended period of limitation as per proviso to Section 73 (1) of Finance Act, can be invoked as under:-
Provided that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of-
(a) fraud; or
(b) collusion; or
(c) willful mis-statement; or
(d) suppression of facts; or
(e) contravention of any of the provisions this Chapter or of the rules made thereunder with intent to evade payment of service tax, by the person chargeable with the service tax or his agent, the provisions of this sub-section shall have effect, as if, for the words one year, the words five years had been submitted.
11.3 Extended period have been invoked by the Revenue on the grounds that the appellant/assessee did not indicate the details of non-taxable/exempted service in the ST-3 returns. Assessees explanation in that initially format prescribed value of exempted services as also notification number. Since, they were providing non-taxable service they had not indicated details in the said column. However, from April 2007 onwards in the amended format of ST-3 returns (wherein requirement of notification number was deleted) they have indicated the amounts received and when department asked further details in February 2009 the same were provided in June 2009. We have seen the ST-3 returns, appellants contention is correct. We also note from para 4 of the demand notice dated 23.4.2010, assessee vide letter dated 15/2/2010, 16/2/2010, 22/2/2010, 23/2/2010 24/2/2010, 25/2/2010, 26/2/2010 and 2/3/2010 produced photocopies of the invoices issued during the period October 2004 to March 2009 alongwith summary of the invoices for the period October 2004 to March 2005, 2005-06, 2006-07, 2007-08 and 2008-09. Honble Supreme Court in the case of CCE Vs. Chemphar Drugs and Liminents, Hyderabad reported 1989 (40) ELT 276 (S. C.) has observed that something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information which manufactures knew otherwise is required to invoke extended period.
11.4 In respect of invoking the extended period of limitation the main contention of the Revenue in the appeals before us is that the earlier show cause notice dated 21.4.2006 was on the ground of alleged evasion and non-payment of service tax in respect of security services provided by appellant to ONGC whereas the show cause notice dt. 23.4.2010 was for Manpower Recruitment and Supply Agency Service, Business Support Service and Cleaning Service. We have already discussed the said notice in relation to appeal No. ST/275/2011-Mum. above, while the said demand notice did include non payment of service tax in respect of security service provided by it to ONGC but was not limited to that, in fact it extended to inquiries with 422 customers spread over the whole country and recording statements of 22 Customers. In fact case of Revenue was that many cases security services were described by others name. Thus this contention of the Revenue is not correct. The next contention is that there was no service tax on Manpower Recruitment and Supply Agency Service before 16.6.2005. Similarly, there was no service tax on cleaning service before the said date. We note that present demand notices start from 1.10.2004. Revenue, obviously cannot demand tax w.e.f. 1.10.2004 that too by invoking extended period, when admittedly, tax on new services was introduced w.e.f.16.6.2005, Even after 16.6.2005 when service tax net was extended to the said services, it does not automatically imply that whatsoever is being done by the appellant other than security services is taxable under category of Manpower Recruitment and Supply Agency Service or Business Support Service or Cleaning Activity Service. Demand notices do not detail basis to make such an allegation. This has to be done by examining in detail the nature of various activities undertaken by the appellants, and all the activities undertaken by the appellants were already informed to the department during investigation much before 16.6.2005 as the earlier demand notice invoking the extended period was issued only on 21.4.2006. Again immediately thereafter appellants have again informed in detail about their activities vide letter dt. 21.6.2006. We also note that as per para 4 of the demand notice dated 23.4.2001, invoices were made available. It is also not clear which documents were asked and not supplied. Keeping in view the allegation in the demand notice dt. 21.4.2006 as also details available to the Revenue it was necessary for the department to examine all the agreements/invoices and nature of service for subsequent period to come to the conclusion whether the services provided are taxable or non-taxable and keep issuing the demand notices from October 2006 onwards. We have gone through the Honble Supreme Court decision in the case of Coaltar Chemicals Manufacturing Co. reported in 2003 (158) ELT 402 (S.C.). In the said case Honble Supreme Court has upheld the decision of this Tribunal rejecting the plea that since information revealed in another proceeding being available to department, extended period cannot be invoked. In that said case, Honble supreme Court has observed:
We do not think we should understand that decision in that manner at all. On the other hand, in a given case whether there is something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability, is a question of fact to be established in each case.
As observed by Honble Supreme Court that in a given case whether there is something positive other than mere inaction or failure on the part of manufacturers or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise is required. In the present case we do not find in the demand notice anything of such a nature out. At the most it can be considered as mere inaction or failure of the appellant/assessee. It does not detail what documents have not been provided by assessee. Assessee has claimed exemption only for services provided to SEZ units. Demand is for Manpower Supply. Invoices have been produced.
In the facts and circumstances particularly when all the activities were informed, detailed investigation had taken place and another show cause notice invoking extended period was already issued, one cannot justify invocation of extended period on this ground.
Revenue has also cited the Honble Supreme Court Court judgement in the case of Commissioner of C.Ex, Aurangabad Vs. Bajaj Auto Ltd. reported in 2010 (26) E.L.T. 17 (S.C.). We do not find anything which helps the cause of Revenue in the said judgement. Honble Supreme Court in the said case observed as under:
12.?Section 11A of the Act empowers the central excise officer to initiate proceedings where duty has not been levied or short levied within six months from the relevant date. But the proviso to Section 11A(1), provides an extended period of limitation provided the duty is not levied or paid or which has been short-levied or short-paid or erroneously refunded, if there is fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty. The extended period so provided is of five years instead of six months. Since the proviso extends the period of limitation from six months to five years, it needs to be construed strictly. The initial burden is on the department to prove that the situation visualized by the proviso existed. But the burden shifts on the assessee once the department is able to produce material to show that the appellant is guilty of any of those situations visualized in the Section.
13.?Interpreting this provision, this Court in Collector of Central Excise, Hyderabad v. Chemphar Drugs and Liniments, Hyderabad, (1989) 2 SCC 127 = 1989 (40) E.L.T. 276 (S.C.), held : (when the period prescribed was six months prior to it being made one year by the Finance Act, 2000, with effect from 12-5-2000) :
In order to make the demand for duty sustainable beyond a period of six months and up to a period of 5 years in view of the proviso to sub-section (1) of Section 11A of the Act, it has to be established that the duty of excise has not been levied or paid or short-levied or short-paid, or erroneously refunded by reasons of either fraud or collusion or wilful mis-statement or suppression of facts or contravention of any provision of the Act or Rules made thereunder, with intent to evade payment of duty. Something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability, before the period of six months. Whether in a particular set of facts and circumstances there was any fraud or collusion or wilful mis-statement or suppression or contravention of any provision of any Act, is a question of fact depending upon the facts and circumstances of a particular case. We do not find anything in demand notices or the appeal before us which suggests that department has fulfilled its initial burden to prove that the situations visualized by the proviso existed. In our view, Commissioner is correct in holding that in view of Honble Supreme Courts decision in the case of Nizam Sugar Factory (supra), extended period of limitation cannot be invoked in the present facts and circumstances. We also note that Honble Supreme Court decision in the case of Chemphar Drugs Liniments (supra) is fully applicable in the present circumstances.
11.5 Even for the demand in the normal period of limitations, it is required. to examine the nature of service provided and based upon such examination one has to determine whether service is taxable or not. If taxable under which category and thereafter the value and hence tax on such service. In the present case, if taxable whether these are covered under Manpower Recruitment and Supply Agency Service, Business Support Service or Cleaning Service. We also note that even though there is allegation that appellant/assessee provided business support service no specific demand has been raised in respect of the said service in the demand notice dt. 23.4.2010. The subsequent two demand notices did not even speak of business support service. Does it imply during the period upto March 2009, appellant was providing business support service and thereafter stopped providing the same service. Similarly, in respect of cleaning services no agreement/invoices have been identified and no specific demand has been raised in any of the three demand notices. In fact only the first demand notice dt. 23.4.2010 speaks of the said service. Subsequently two demand notices did not even speak about the said service. It is only the appellant who during the hearing before adjudicating authority admitted that they were providing cleaning activity service and paid the service tax along with interest voluntarily even for notices dated 15.10.2010 and 21.10.2011 even though these notices did not speak of cleaning service. We also note that even while filing appeal before this Tribunal, Revenue have not commented on various documents invoices/agreements etc. produced before the adjudicating authority. The findings of the adjudicating authority are not being disputed on such analysis, but is based upon the bald assertion that the adjudicating authority has failed to take into consideration the various documentary evidences like contract which were available before him to correctly determine the classification of service rendered by the appellant. If the Revenue would have detailed in appeal/demand notices, the same would have helped this Tribunal to appreciate if the findings of the adjudicating authority are indeed incorrect. Main plea of the respondent/assessee is that they are providing services like fire fighting services, housekeeping service, customer care service etc. and all these services are under the supervision and control of respondent/assessee and not their clients. The said assertion of the assessee has not been controverted by examination of documents or any other evidence. Similarly, we find that the adjudicating authority has found that the appellant has produced the requisite certificate in requirement of security agency services provided to SEZ unit or to developers of the SEZ and based on these certificates along with Chartered Accountant certificate, and hence adjudicating authority found that the demand does not survive except a small amount relating to one STEP unit (which was confirmed). In the appeal filed before us it is not clear why the said finding of the adjudicating authority is incorrect whether the certificate which were produced before the adjudicating authority during investigation were incorrect or the reasons for doubting the Chartered Accountant certificate has also not been mentioned. We therefore find no strength in the said contention of the appeal filed by the Revenue.
11.6 In the appeal filed by Revenue, it is contended that adjudicating authority has failed to take into consideration the various documentary evidences like contracts which were available before him to correctly determine the classification of the service. Further, four contracts are cited among large numbers of contracts produced during adjudication. We note from prara 4 of the demand notice dated 23.4.2010, assessee vide letter dated 15/2/2010, 16/2/2010, 22/2/2010, 23/2/2010 24/2/2010, 25/2/2010, 26/2/2010 and 2/3/2010 produced photocopies of the invoices issued during the period October 2004 to March 2009 alongwith summary of the invoices for the period October 2004 to March 2005, 2005-06, 2006-07, 2007-08 and 2008-09. However, no effort was made to examine corresponding agreements and arrive at the taxability or non-taxability, and in case of taxable service, their classification. However, demand notices were issued simply from the balance sheet taking gross income. During adjudication assessee produced large number of contracts, before adjudicating authority to claim that they are not providing Manpower Supply Service. Now revenue has cited four contracts among these to claims that assessee was providing Manpower Supply Service. One of contracts cited in the appeal by Revenue is the contract dated 6.7.2010 entered into by the assessee with Indian Institute of Gemoagnatism We have gone through the said contract which includes Guest-House, Attendant, Gardner and Sweepers. One of the terms of conditions is You (assessee) shall provide the manpower, machinery and equipment at the required time for the satisfactory completion of the work at no extra cost to the institute.
From the said condition, it appears that assessee was providing the Gardening and Sweeping Services as the machinery and equipment were also to be supplied by the assessee. From the available details, therefore it cannot be said that what was being provided was Manpower Supply Service. Second contract cited is Contract No.1171/200708 dated 31.01.2008 entered into with Punjab and Maharashtra Co-operative Bank Ltd. Bhandup (W). We have gone through the said contract. First of all the said contract appears to be with M/s. BIS Utilities Pvt. Ltd. Mumbai and not the appellant/assessee in these appeals. Further from the letter it appears that it is to provide Customs Care service. Copy of the agreement is not available. In the absence of the said agreement, it cannot be said that this is for Supply of Manpower Service. Third contract cited is dated 1.12.2006 entered into by the assessee with Shree Maheshwer Hydel Power Corporation Ltd. We have seen the said contract and we observe that this contract was entered on 1.12.2006. It is not clear whether services were provided within the normal period of limitation in pursuance of this contract. Moreover, from the agreement it is not clear whether the person supplied has to work under the superintendence and control of appellant/ assesse or his Customers. Assessees claim is that they have to work under his supervision and control. Revenue has not brought any evidence to contrary. Fourth contract cited is dated 13.1.2005 entered into by the appellant/assessee and Suryamukhi Lok Surabhi Co-op. Hsg. Society Ltd. We have gone through the said contract. It is seen that this was entered in Jan.2005. It is not known whether any service was provided by them within the normal period of demand. Further, contract is Work Order for Utility Service. Details of Utility Service is not clear. Further it is not clear that attendants supplied were to work under the superintendence and control of appellant/assessee on the customer. From the above details, it cannot be said that assessee has provided Manpower Supply Service.
In view of the above analysis, all the three appeals filed by Revenue are dismissed.
12. ST/85713,86826,86827/2013-Mum.
These appeals have been filed against the impugned order dt. 31.1.2011 by the appellant/assessee. The said order covers the three show cause notices as discussed in para 9 earlier. The appellant/assessee has filed appeal against :
(i) Confirmation of demand of Rs.47,87,874/- in respect of the security services provided to ONGC.
(ii) Confirmation of demand of Rs.1,48,40,932/- in respect of reimbursement /compensation received by the appellant/assessee in respect of the taxable services.
(iii) Confirmation of demand of Rs.3,59,53,895/- in respect of the cleaning services.
All these demands are pertaining to the period October 2008 to 2011.
13. Initially appellant had filed the three appeals against the confirmation of the demand relating to security services provided to ONGC alone. However, subsequently they filed miscellaneous applications for modification of the three appeals wherein they challenged the confirmation on the remaining two grounds namely service tax on the reimbursement /compensation relating to taxable services and service tax on cleaning services. The said miscellaneous applications were allowed by the Tribunal.
14. In respect of confirmation of demand relating to security services provided to ONGC, main contention of the appellant/assessee is that they have entered into an agreement with ONGC prior to introduction of service tax on security agency services and the said agreement consists of two parts. The first part is relating to the service charges on their part and second part is relating to reimbursement of the salary, provident fund, ESIC and other benefits being extended to the security personnels. After the introduction of the service tax on security services they have been trying to persuade ONGC to bear the burden of service tax. However, ONGC has refused to pay them the service tax. In fact appellant/assessee had gone to the Honble Bombay High Court and the matter is pending before the Honble Bombay High Court. Their contention is that as soon as matter will be sorted out and they receive the service tax amount from the ONGC, they undertake to pay the same to the department.
In addition to above, the appellant/assessee has also contended that benefit like contribution to EPF, ESIC and the salary of the security personnel cannot form part of the assessable value as these charges are nothing but reimbursement of the actual expenditure done by them. They have also quoted certain judgements in support of their contention. The case laws are
(i) Malabar Management Services Pvt. Ltd. Vs. Commissioner 2008 (9) STR 483 (Tri.)
(ii) S. Jayashree Vs. Commissioner 2007 (6) STR 389 (Tri.).
15. As far as appellant/assessees appeal against the confirmation of demand on reimbursement of actual expenses/compensation is concerned. The argument advances are the same as in the case of security agency services provided to ONGC and their claim is that for the same reason no tax is payable on the said amount. It is also their contention that after the introduction of the Service Tax (Determination of Value) Rules 2006 since they are only acting as pure agent and therefore these reimbursement are not to be included in the assessable value for determination of taxable value and hence the service tax.
16. As far as confirmation of the demand in respect of Cleaning Activity Service is concerned. The main contention of the appellant/assessee is that the three demand notices issued by the Revenue are not for Cleaning Activity services but these demand notices were issued for Manpower Supply Service. Since the demand notices were not for cleaning service, it was incorrect on the part by the adjudicating authority to confirm the demand under the Cleaning Activity service.
17. Ld. Advocate for the appellant reiterated various points made in the appeal memorandum in respect of the three appeals.
18. The Ld. Special Counsel for Revenue stated that it is a settled matter that for the purpose of service tax, taxable value is gross amount charged for providing the service. In case of security service the services of security guards are integral part and hence any expenditure incurred including their salary, EPF, ESIC in connection with the security guards will form part of the taxable value under Section 67 of the Finance Act. Ld. A.R. also contended that the matter is already settled by this Tribunal in the case of Punjab Ex-Servicemen Corporation Vs. Commissioner of Central Excise reported in 2007 (5) STR 214 (Tri.Del.) which is based upon the judgement of the Honble Madras High Court in the case of GDA Security Private Limied Vs. Union of India reported in 2006 (2) STR 542 (Mad.). Ld. Counsel also stated that the same would apply to the reimbursement/compensation of expenses in connection with other taxable service are concerned. As far as, confirmation of the demand on the cleaning activity service is concerned, Ld. Special Counsel argued that it is not disputed by the appellant/assessee that they were providing Cleaning activity services and under the self assessment procedure it was incumbent on them to ascertain and pay the service tax. During the personal hearing they themselves agreed before the Commissioner to make the payment of the said service tax. It is thus clear that the leviability of the tax is not under dispute. The objection raised is only technical in nature and in fact the department could have issued another demand notice had they not agreed to pay the same during the personal hearing. Further, the appellants contention that they were forced to pay the said amount is not correct as they have paid the same amount voluntarily after the passing of the said adjudication order and there was no question of applying any force. Ld. Special Counsel also stated that the nature of voluntary payment is evident from the fact initially, they did not even file the appeal relating to the said payments. It is only later on through the route of miscellaneous application that they amended their appeal to include the tax paid relating to cleaning services and service tax on reimbursement of expenses.
19. We have considered the rival submissions, the first issue is relating to the salary of the security guards, payments relating to EPF, ESIC etc. Section 67 of the Finance Act provides that when service tax is chargeable on any taxable service with reference to value than such value shall be the gross amount charged by the service provider for such service. The section also provides that where the consideration is not only in terms of money the additional consideration is to be added to arrive at the gross amount charged. In the case of security services it is not disputed that payments like salary of the security guards, provident fund, ESIC etc. are being collected/charged by the appellant/assessee from their customers. The said amount is being recovered by the appellant/assessee from the service receiver in addition to their own service charges. Under the circumstances we have no hesitation in holding that the said amount will form part of the assessable value as has been consistently held by this Tribunal in large number of judgements including that of Punjab Ex-Servicemen Corporation (supra). The Honble High Court of Madras judgement in the case of GDA Security Pvt. Ltd. (supra) Honble High Court of Kerla in the case of Security Agencies Association Vs. Union of India reported in 2012 (28) STR 3 (Ker.) have also held so. Even after the introduction of Service Tax (Determination of Value) Rules 2006 these reimbursement cannot be considered as pertaining to reimbursement as a pure agent as security guard is integral part of service and all charges pertaining to him will form part of the value. These do not satisfy the conditions of pure agent. We are therefore of the considered view that salary, EPF, ESIC etc. will form part of the taxable value. Even the appellant/assessee has gone to the Honble Bombay High Court against ONGC to recover the service tax. The fact that ONGC is not paying to the appellant/assessee will not make any difference as far as appellant/assessees liability to pay the service tax to the Government is concerned. The fact that ONGC is not paying to them is a matter between the appellant/assessee and ONGC. We therefore hold that appellant is liable to pay the service tax as the services provided to ONGC and on the gross amount including salary, EPF, ESIC etc.
20. For the reasons stated above, other demand which has been confirmed by the Commissioner relating to reimbursement/compensation of expenses in respect of taxable service are nothing but similar amounts recovered from other customers and for the same reason as mentioned earlier appellant is required to pay the service tax on the same.
21. As far as the third issue relating to cleaning activity services is concerned, appellant/assessee are not disputing that they were providing Cleaning Activity service which is chargeable to service tax. In fact during the hearing before adjudicating authority they have agreed to the same and also offered voluntarily to pay the same in respect of the Cleaning Activity services provided to commercial and industrial organization. Having volunteered to pay the service tax on the cleaning activity services which in any case they were liable to pay, we do not see any substance in the appeal filed by the appellant/assessee. It may be true that the demand notices did not speak of the cleaning service or demanded the service tax but same was demanded as Manpower Recruitment and Supply Service, but the fact remains the appellant/assessee was aware of the same, has provided the same service, is not disputing the taxability of the said service and therefore, at this stage appellant/assessee cannot be permitted to go back on his words. Even the payments made by the appellant/assessee were voluntarily and cannot be considered under duress as the payments were made after the adjudication order was passed and before the appeals were filed before this Tribunal. We also note that initially they did not file appeals in respect of Cleaning Activity service and service tax relating to reimbursement/compensation of expenses. It is only when they came to know of the appeals filed by Revenue, that they amended their appeals by disputing the said payments.
22. Under the circumstances we dismiss all the three appeals filed by the appellant/assessee.
23. In the result, all the four appeals filed by the appellant/assessee and three appeals filed by Revenue are dismissed. Cross objection filed by Revenue in one case is also disposed of in above terms.
(Pronounced in court on /04/2014)
(S.S. Kang)
Vice President
(P.K. Jain)
Member (Technical)
Sm
??
??
??
??
45