Custom, Excise & Service Tax Tribunal
Oil And Gas Corporation Ltd vs Surat-I on 20 November, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
West Zonal Bench At Ahmedabad
REGIONAL BENCH- COURT NO.3
Service TaxAppeal No.10564 of 2019
(Arising out ofCCESA-SRT-APPEALS-PS-630-2018-19 dated 30.11.2018 passed by
Commissioner (Appeals) -Surat)
Oil and Natural Gas Corporation Ltd. ...Appellant
Hazira Gas processing complex, Magdulla-dumas
Po ONGC Nagar, Surat-Gujarat
VERSUS
C.C.E. & S.T. Surat-I ...Respondent
New Building, Opp. Gandhi Baug, Chowk Bazar, Surat-Gujarat-395001 APPEARANCE:
Shri S. Suriyanarayanan, Advocate appeared for the Appellant Shri N.G. Makwana, Superintendent (Authorized Representative) for the Respondent CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. RAJU Final Order No.___12745___/2023 DATE OF HEARING: 14.11.2024 DATE OF DECISION: 20.11.2024 RAMESH NAIR The brief facts of the case are that the appellant was availing security service from Central Industrial Security Force (CISF) for which they were paying service tax on the reverse charge mechanism on security service on net value paid to the CISF. However the appellant are providing the accommodation to the CISF personnel. The case of the department is that intrinsic value of the house rent in respect of accommodation provided to the CISF personnel should be added in the gross value of security service, therefore, there is a short payment of service tax to this extent.
2. Shri S. Suriyanarayanan, learned counsel appearing on behalf of the appellant, at the outset submits that the appellant are paying service tax only on the net consideration paid by them to the CISF which is gross value charged by the service recipient from the appellant on which the service tax was paid on reverse charge basis. He submits that only the gross amount charged is liable to service tax. The accommodation provided by the appellant to CISF personnel being not a consideration, the same is not liable to be added in the gross value for the purpose of
2|Page ST/10564/2019 charging service tax. He submits that this issue is no longer res-integra as this Tribunal in various following judgment considered this issue:
Bharat Coking Coal Ltd. 2021 (9) TMI 23-CESTAT-KOLKATA NTPC Ltd. 2024 (5) TMI 816-CESTAT-AHD NTPC Ltd. 2024 (9) TMI 616-CESTAT-AHD NTPC Ltd. 2024 (10) TMI 1130 CESTAT-AHD UOI Vs. Intercontinental Consultants and Technocrats Pvt. Ltd.- 2018 (10) GSTL 401 (SC) CST Vs. Bhayana Builders (P) Ltd.- 2018 (10) GSTL 118 (SC) Commr. of CGST Vs. Commandant, CISF Unit-2019 (24) GSTL 232 (T) Central Industrial Security Force Vs. CCE &ST-2019 (1) TMI 1661 -
CESTAT Order No.10779/2024 dated 8.4.2024 passed by Hon'ble CESTAT, Ahmedabad in case of Central Industrial Security Force
3. Shri N. G. Makwana, learned Superintendent (Authorised Representative) appearing on behalf of the Revenue reiterates the findings of the impugned order.
4. We have carefully considered the submissions made by both sides and perused the records. We find that the issue involved in the present case is no longer res-integra as the same has been decided in the various judgments which are as follows:
NTPC Ltd. 2024 (10) TMI 1130
4. We have carefully considered the submissions made by both the sides and perused the records. We find that issue of valuation of free housing facility provided by the appellant to the CISF personnel is no longer res integra as this Tribunal vide it's Final Order No.11035/2024 dated 15.05.2024 in the appellant's own case NTPC Ltd vs. CCE & ST- Surat-I decided the issue in favour of the appellant, the relevant portion of which is extracted 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 dated 21.01.2016 where under all the charges as invoked in the show cause notice have been confirmed.
3|Page ST/10564/2019
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 CoalLimited vs. CCE & ST, Dhanbad reported under 2021- TIOL 551- CESTAT-KOL has decided the same issue pertaining to the appellant. The relevant extract of the 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 alreadydepositing 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 ofCommr. 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 caseBhayana 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/Rfor the Revenue, the demand was confirmed for the reason that thereimbursement was not claimed on actual basis and that there was nopre-arrangement with the client for authorizing such reimbursement ofexpenses 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 Revenuecannot be accepted. In so far as the issue of extended period of limitationis 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.
4. Following the above decision, we hold that impugned orderin- original is without any merit therefore, we set-aside the same. Appeal is allowed."
4.1 We further find that on the issue of whether monetary or otherwise it should flow from a service recipient to a service provider and should accrue to the benefit of the latter; and that this is a precondition of taxability under Section 67, the CESTAT, Allahabad has decided the matter in the case of Central Industrial Security Force versus
4|Page ST/10564/2019 Commissioner Of Customs, C.E. & S.T., ALLAHABAD, 2019 (1) TMI 1661, relevant portion of which is reproduced below:
"3. Having considered the submissions made by both sides, we find that Hon'ble Delhi High Court held in the case of Intercontinental Consultants & Technocrats Pvt. Ltd. (supra) that provisions of Rule 5 of Service Tax (Determination of Value) Rules, 2006 were not in accordance with the provisions of Section 67 of Finance Act, 1994 and therefore, the reimbursable expenses paid to the service provider are not includable in the assessable value. We also note that Hon'ble Supreme Court has upheld the said decision of Hon'ble Delhi High Court and held that Section 67 of Finance Act, 1994 authorizes only such consideration which is received by the service provider for assessment of service tax. By following the said ruling of Hon'ble Supreme Court we hold that the impugned order is not sustainable.
4. We, therefore, set aside the impugned order and allow the appeal."
From the above decisions, it is seen that the demand raised by the Department is unsustainable and liable to be set aside.
4.2 We further observed that the appellant are not liable to pay service tax on the value of accommodation, vehicles for transportation, telephone facilities, etc. and it is found that as regard the issue penalty, the demand on merits is not sustainable, there is no question of imposition of penalty under Section 76. It is also observed that when the demand is not maintainable, there is no question of interest on the differential demand of service tax. Hence, the interest demand on the differential service tax liability is not maintainable.
5. Considering the above decision and finding, the impugned order is set aside, the appeal is allowed."
Similar issue has been considered in the case of Bharat Coking Coal Ltd. (supra) by the Kolkata Bench of CESTAT wherein the following order was passed:
"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.
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|Page ST/10564/2019 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."
In view of above judgments, issue is no longer res-integra. Hence the intrinsic value of the rent for the accommodation provided by the appellant to the service provider M/s CISF is not includible in the gross value of security service, therefore, demand thereon is not sustainable. Hence, the impugned order is set aside. Appeal is allowed.
(Pronounced in the open court on __20.11.2024_) (RAMESH NAIR) MEMBER (JUDICIAL) (RAJU) MEMBER (TECHNICAL) Neha