Custom, Excise & Service Tax Tribunal
Ntpc Ltd vs Surat-I on 11 September, 2024
Customs, Excise & Service Tax Appellate Tribunal
West Zonal Bench at Ahmedabad
REGIONAL BENCH-COURT NO. 3
SERVICE TAX Appeal No. 11985 of 2019- DB
(Arising out of OIA-CCESA-SRT-APPEAL-PS-063-2019-20 dated 10/05/2019 passed by
Commissioner ( Appeals ) Commissioner of Central Excise, Customs and Service Tax-
SURAT-I)
Ntpc Ltd ........Appellant
Kawas Gas Power Project,
Sardar Patel Bhavan, Hazira Road,
Adityanagar
Surat, Gujarat
VERSUS
Commissioner of C.E. & S.T.-Surat-I ......Respondent
New Building...Opp. Gandhi Baug, Chowk Bazar, Surat, Gujarat- 395001 APPEARANCE:
Shri Jigar Shah, Advocate for the Appellant Shri Anand Kumar, Superintendent (AR) for the Respondent CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. C L MAHAR Final Order No. 11981/2024 DATE OF HEARING: 08.07.2024 DATE OF DECISION: 11.09.2024 RAMESH NAIR The brief facts of the case are that in EA - 2000 audit of the appellant's record, one of the issue raised in the audit report was that CISF while providing the security service and charging for the security charges was not charging House Rent Allowance (HRA) for their employee as part of salary as they were availing housing/ accommodation facility provided by the appellants. Hence, the housing/accommodation facility shall be treated as additional consideration and service tax was payable on the same. The audit objection was converted in issuance of show cause notice dated 22.09.2015 proposing to demand service tax of Rs.
13,02,202/- for the period July, 2012 to March, 2015. Matter relating to above show cause notice has been decided by this CESTAT Ahmedabad
2|Page ST/11985/2019 -DB reported at NTPC Ltd vs. CCE & ST , Surat - 2024 (5) TMI 816- CESTAT.
Subsequently, the show cause notice for the period April, 2015 to June 2017 on the same ground proposing to demand of service tax under the category of business support service was issued. The said show cause notice dated 04.04.2018 was adjudicated by the Assistant Commissioner vide Oder-In-Original dated 28.01.2019. Being aggrieved by the said Order-In-Original an appeal was filed before the Commissioner (Appeals) Central Excise , Customs and Service Tax , Surat. Learned Commissioner (Appeals) also upheld the Order-In-Original dated 28.01.2019. Therefore, the present appeal filed by the appellant.
2. Shri Jigar Shah, Learned Counsel appearing on behalf of the Appellant at the outset submits that this issue is no longer res-integra as in the various judgments it was held that certain amenities provided by the service recipient to the security service provider shall not form security service. He placed reliance on the following judgments:-
CGST vs. Commandant CISF Unit - 2019 (2) TMI 1175 - CESTAT New Delhi SR Commandant Central Industrial Security Force vs. CC - 2023 (4) TMI 872 -CESTAT New Delhi Bharat Coking Coal Ltd vs. CCE - 2021 (9) TMI 23 -CESTAT Kolkata NTPC Ltd vs. CCE - 2024 (5) TMI 816 - CESTAT CCE vs. Commandant Central Industrial Security Force - 2024 (6) TMI 910-CESTAT
3. Shri Anand Kumar, Learned Superintendent (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order.
3|Page ST/11985/2019 -DB 4. We have carefully considered the submission made by both sides and perused the record. We find that the issue that the accommodation
provided by the service recipient to the security staff whether the same is includible in the gross value of the security service has been considered in the judgments cited by the learned counsel. Some of the judgments are reproduced below:-
In case of CGST vs. Commandant CISF Unit - 2019 (2) TMI 1175 -
CESTAT New Delhi, the Delhi Bench of the Tribunal decided the matter as under :-
5. After hearing both the parties we are of the opinion as follows:
Section 67 of Finance Act has to be looked into foremost for the adjudication which reads as follows:
"167. Valuation of taxable services for charging service tax (1) Subject to the provisions of this Chapter, service tax chargeable on any taxable service with reference to its value shall,-
(i) in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him;
(ii) in a case where the provision of service is for a consideration not wholly or partly consisting of money, be such amount in money, with the addition of service tax charged, is equivalent to the consideration;
(iii) in a case where the provision of service is for a consideration which is not ascertainable, be the amount as may be determined in the prescribed manner.
(2) .....
(3) .....
(4) Subject to the provisions of sub-sections (1), (2) and (3), the value shall be determined in such manner as may be prescribed Explanation.-For the purposes of this section,-
4[(a) "consideration" includes-
(i) any amount that is payable for the taxable services provided or to be provided;
(b) ....
4|Page ST/11985/2019 -DB
(c) "gross amount charged" includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debit notes and 2[book adjustment, and any amount credited or debited, as the case may be, to any account, whether called "Suspense account" or by any other name, in the books of account of a person liable to pay service tax, where the transaction of taxable service is with any associated enterprise."
Since the demand was proposed alongwith Rule 3 of Determination of Value Rules. Same is also relevant to be looked into which reads as follows:
"3. Manner of determination of value.- Subject to the provisions of section 67, the value of taxable service,1 where such value is not ascertainable, shall be determined by the service provider in the following manner:- (a) the value of such taxable service shall be equivalent to the gross amount charged by the service provider to provide similar service to any other person in the ordinary course of trade and the gross amount charged is the sole consideration; (b) where the value cannot be determined in accordance with clause (a), the service provider shall determine the equivalent money value of such consideration which shall, in no case be less than the cost of provision of such taxable service."
A joint reading of both the provisions makes it clear that the service tax is chargeable on the value of the service provided. In the present case service provided is the security personnels by CISF to M/s BHEL. The liability qua the amount received in lieu of providing said service has admittedly been discharged by the provider (CISF).
6. The controversy is as to whether the free accommodation provided by the service recipient to the security personnels shall be consideration to be included in the gross value.
7. To our opinion, consideration received against providing any service, i.e. as per explanation Section 67, is something which include any amount payable for taxable services provided or to be provided. The bare reading makes it clear that in case any amount is payable qua to CISF the accommodation being provided to the security personnels that it shall be the consideration. If it is consideration, then only Rule 3 Value of Determination rules will come into picture. But as observed by Commissioner(Appeals) vide the Order under challenge that there is no evidence on the point about any amount either in terms of HRA was ever paid to the respondent/CISF, the question of notional value of the free accommodation provided cannot form the part of the gross value which has to be taxed under Section 67 of the Act. We therefore do not find any infirmity in the findings of Order under challenge.
8. Also coming to the aspect of limitation as has been raised by the respondent, we observe that the period of demand herein is w.e.f. April 2009 to June 2012. SCN is issued on 09.09.2014. It is clear that the entire period of demand is beyond the normal period of one year. The service provider herein is Government undertaking. Service recipient is also a public sector undertaking. There cannot be a single good reason for either of the two to have an intent to evade the tax. there is otherwise no evidence by the Department to prove any positive act on part of the service provider which may amount as mensrea on the part of the provider to evade tax. Rather from the above discussion it is apparent that SCN was issued under notional presumption of free accommodation to be the part of consideration which otherwise was not the liability of the service provider in the given circumstances. Hence, to our opinion, there appears no case of any suppression or mis-representation of facts on part of the service
5|Page ST/11985/2019 -DB provider (CISF). The Department had no occasion to provisio to Section 73 of the Finance Act, 1994 for invoking the extended period of limitation. Seeing from this angle, SCN is hit by the principle of limitation.
9. In view of entire above discussion, the Order is opined to have no infirmity. Appeal stands dismissed."
The similar view has been taken by the principle bench of this tribunal at Delhi in the case of SR Commandant Central Industrial Security Force vs. CC - 2023 (4) TMI 872 -CESTAT New Delhi:-
"The order dated 10.02.2017 passed by the Commissioner (Appeals) to the extent it holds that the appellant would be liable to pay service tax with interest has been assailed in this appeal.
2. The allegations against the appellant was that it was discharging service tax liability on the consideration received towards salary and allowance, but it did not discharge service tax on non-monetary consideration such as free accommodation, medical facilities, vehicle and telephone insurance and stationery and other expenses for the period April 2009 to March 2012. The show cause notice dated 12.03.2014 also invoked the extended period of limitation contemplated under the proviso to section 73 of the Finance Act 1994. The Joint Commissioner by order dated 19.02.2015, confirmed the demand of service tax with penalty and interest. The appeal filed by the appellant before the Commissioner (Appeals) was allowed in part. The penalty imposed upon the appellant was set aside but the confirmation of demand of service tax with interest was upheld. This appeal has accordingly, been filled to assail that portion of order of Commissioner (Appeals) that confirms the demand of service tax with interest.
3. Learned counsel for the appellant submitted that the issue as to whether the aforesaid value of non-monetary consideration could be included in the taxable value has been decided in M/s. Central Industrial Security Force (CISF) vs Commissioner of Service Tax, Pune [2022 (11) TMI 835 CESTAT MUMBAI], following the decision of Supreme court in Union of India and another vs M/s. intercontinental Consultants and Technocrats Pvt. Ltd.
[2018 (3) TMI 357 (Supreme Court)] Learned counsel, therefore, submits that the impugned order confirming the demand of service tax with interest should be set aside.
4. Dr. Radhey Tallo, learned authorized representative, appearing for the department has very fairly stated that the issue involved is covered by the decision of the Tribunal in CISF. In this decision, the Tribunal placed reliance upon the earlier decision of the Tribunal in Bharat Coking Coal Ltd. vs Commissioner of Central Excise & Service Tax, Dhanbad [2021 (9) TMI 83 Cestat kol.] wherein it was held:
"7. We find that the issue to be decided is whether costs reimbursed by the appellant to CISF for medical & telephone facilities, imprest expenses and notional value for rent free accommodation, free supply of rented vehicles, etc. are to be added to the assessable value for payment of service tax on reverse charge basis. The appellant is already depositing service tax on reverse charge basis on
6|Page ST/11985/2019 -DB the cost of deployment, cost of arms and ammunition, cost of clothing items (uniforms), etc. which is not in dispute.
We find that the Allahabad Bench of the Tribunal in the case of Central Industrial Security Force v Commissioner of Customs, C.E. & S.T., Allahabad, Appeal No. ST/70293/2016-CU[DB] decided on 9th January, 2019, has already settled the issue in favour of the appellant to hold that expenses incurred towards medical Services, vehicles, expenditure on Dog Squad, stationery expenses, telephone charges, expenditure incurred by the service recipient for accommodation provided to CISF etc are not includible. Further, the Principal Bench at New Delhi in the case of Commr. Of CGST, Cus & C. Ex, Dehradun vs Commandant CISF, CISF Unit, 2019 (24) GSTL 232 (Tri- Delhi), has also held that free accommodation provided by the service recipient to CISF security personnel providing security services is not includable in taxable value.
We find that the Ld. Commissioner has merely confirmed the demand, in para 26 appearing in Page 25 of the impugned adjudication order, on the ground that the issue was pending for consideration before the Supreme Court in the case Bhayana Builders (P) Ltd (Supra) and Intercontinental Consultants and Technocrats Private Limited (Supra), on the date of passing the impugned order.
Since the issue is no longer res integra, as the legal position has already been decided by the Hon'ble Supreme Court in both the above judgements, this Tribunal is bound by the said legal position."
5. Thus, for the reasons stated in the aforesaid decision of the Tribunal, with which we have no reason to differ, the impugned order deserves to be set aside. It would, therefore, not be necessary to examine the issue relating to limitation.
6. Thus, for the reasons stated above, the order dated 10.02.2017 passed by the Commissioner (Appeals) to the extent it has confirmed the demand of service tax with interest is set aside and the appeal is allowed."
In the case of Bharat Coking Coal Ltd vs. CCE - 2021 (9) TMI 23 -
CESTAT Kolkata, this Tribunal held as under:-
"7. We find that the issue to be decided is whether costs reimbursed by the appellant to CISF for medical & telephone facilities, imprest expenses and notional value for rent free accommodation, free supply of rented vehicles, etc. are to be added to the assessable value for payment of service tax on reverse charge basis. The appellant is already depositing service tax on reverse charge basis on the cost of deployment, cost of arms and ammunition, cost of clothing items (uniforms), etc. which is not in dispute.
We find that the Allahabad Bench of the Tribunal in the case of Central Industrial Security Force v Commissioner of Customs, C.E. & S.T., Allahabad, Appeal No. ST/70293/2016-CU[DB] decided on 9th January, 2019, has already settled the issue in favour of the appellant to hold that expenses incurred towards medical Services, vehicles, expenditure on Dog Squad, stationery expenses, telephone charges, expenditure incurred by the service recipient for accommodation provided to CISF etc are not includible. Further, the Principal Bench at New Delhi in the case of Commr. Of CGST, Cus & C. Ex, Dehradun vs Commandant CISF, CISF Unit, 2019 (24) GSTL
7|Page ST/11985/2019 -DB 232 (Tri- Delhi), has also held that free accommodation provided by the service recipient to CISF security personnel providing security services is not includable in taxable value.
We find that the Ld. Commissioner has merely confirmed the demand, in para 26 appearing in Page 25 of the impugned adjudication order, on the ground that the issue was pending for consideration before the Supreme Court in the case Bhayana Builders (P) Ltd (Supra) and Intercontinental Consultants and Technocrats Private Limited (Supra), on the date of passing the impugned order. Since the issue is no longer res integra, as the legal position has already been decided by the Hon‟ble Supreme Court in both the above judgements, this Tribunal is bound by the said legal position.
We also note that in the Tribunal decision in the case of Impact Communications (Supra) which has been heavily relied by the Ld. A/R for the Revenue, the demand was confirmed for the reason that the reimbursement was not claimed on actual basis and that there was no pre- arrangement with the client for authorising such reimbursement of expenses which is not the case herein inasmuch as there is a specific MOU agreed with the CISF as also appearing in the appeal paper book. There is no dispute in the entire case proceedings that expenses have been reimbursed on actual basis. Hence, the contentions of the Revenue cannot be accepted. In so far as the issue of extended period of limitation is concerned, we do not find any case of fraud or suppression and hence, the notice issued by invoking extended period is not sustainable.
In view of the above discussions, the impugned order cannot be sustained and therefore, the same is set aside. The appeal is thus allowed with consequential relief."
It is pertinent to mention that in the appellant's own case for the previous period on the identical issue, this tribunal set aside the demand and allowed the appeal. The order of NTPC Ltd vs. CCE - 2024 (5) TMI 816 - CESTAT is reproduced below:-
"4. We have heard both the sides and we find that the matter is no longer res Integra as this Tribunal Vide it's Final Order No. 10779/2024 dated 08.04.2024 in case of M/s. CISF V/s. Commissioner of Central Excise and Service Tax, Rajkot has already decided the issue at hand in favour of the appellant. The relevant extract of the above order is reproduced here below:-
"2. It is matter of record that since the value of certain facilities was not available, the department by invoking the provisions of Section 72 of the Finance Act, 1994 (best judgment method) has calculated the value of above mentioned free services at 25% of the cost of deployment as the value of such facilities extended by Reliance Industries Limited to the appellant. On the above contention, a show cause notice dated 09.04.2015 has been issued to the appellant demanding service tax of Rs. 89,46,991/- by invoking the provisions of Section 71(1) of Finance Act, 1994. Interest and penal provisions have also been invoked in the show cause notice. The matter has been adjudicated by learned Principal Commissioner vide his order
8|Page ST/11985/2019 -DB dated 21.01.2016 whereunder all the charges as invoked in the show cause notice have been confirmed.
3. We have heard both the sides. We find that the matter is no longer res-integra as this Tribunal in the case of M/s. Bharat Coking Coal Limited vs. CCE & ST, Dhanbad reported under 2021-TIOL-551- CESTAT-KOL has decided the same issue pertaining to the appellant. The relevant extract of het above mentioned decision is reproduced below:-
"7. We find that the issue to be decided is whether costs reimbursed by the appellant to CISF for medical & telephone facilities, imprest expenses and notional value for rent free accommodation, free supply of rented vehicles, etc. are to be added to the assessable value for payment of service tax on reverse charge basis. The appellant is already depositing service tax on reverse charge basis on the cost of deployment, cost of arms and ammunition, cost of clothing items (uniforms), etc. which is not in dispute.
We find that the Allahabad Bench of the Tribunal in the case of Central Industrial Security Force v Commissioner of Customs, C.E. & S.T., Allahabad, Appeal No. ST/70293/2016-CU[DB] decided on 9th January, 2019, has already settled the issue in favour of the appellant to hold that expenses incurred towards medical Services, vehicles, expenditure on Dog Squad, stationery expenses, telephone charges, expenditure incurred by the service recipient for accommodation provided to CISF etc are not includible.
Further, the Principal Bench at New Delhi in the case of Commr. of CGST, Cus & C. Ex, Dehradun vs. Commandant CISF, CISF Unit, 2019 (24) GSTL 232 (Tri- Delhi), has also held that free accommodation provided by the service recipient to CISF security personnel providing security services is not includable in taxable value. Service Tax Appeal No. 75020/2017 We find that the Ld. Commissioner has merely confirmed the demand, in para 26 appearing in Page 25 of the impugned adjudication order, on the ground that the issue was pending for consideration before the Supreme Court in the case Bhayana Builders (P) Ltd (Supra) and Intercontinental Consultants and Technocrats Private Limited (Supra), on the date of passing the impugned order. Since the issue is no longer res-integra, as the legal position has already been decided by the Hon'ble Supreme Court in both the above judgments, this Tribunal is bound by the said legal position.
We also note that in the Tribunal decision in the case of Impact Communications (Supra) which has been heavily relied by the Ld. A/R for the Revenue, the demand was confirmed for the reason that the reimbursement was not claimed on actual basis and that there was no pre-arrangement with the client for authorizing such reimbursement of expenses which is not the case herein inasmuch as there is a specific MOU agreed with the CISF as also appearing in the appeal paper book. There is no dispute in the entire case proceedings that expenses have been reimbursed on actual basis. Hence, the contentions of the Revenue cannot be accepted. In so far as the issue of extended period of limitation is concerned, we do not find any case of fraud or suppression and hence, the notice issued by invoking extended period is not sustainable.
In view of the above discussions, the impugned order cannot be sustained and therefore, the same is set aside. The appeal is thus allowed with consequential relief.
9|Page ST/11985/2019 -DB
4. Following the above decision, we hold that impugned order-in- original is without any merit therefore, we set-aside the same. Appeal is allowed."
5. In view of above we hold that impugned Order-In-Appeal is without any merit and therefore, we set aside the same. Appeal is accordingly allowed."
5. In view of the above judgments wherein the issue stand settled in favour of the appellant, the present impugned order is not sustainable.
Hence, the impugned order is set aside and appeal is allowed.
(Pronounced in the open court on 11.09.2024) (RAMESH NAIR) MEMBER (JUDICIAL) (C L MAHAR) MEMBER (TECHNICAL) Raksha