Custom, Excise & Service Tax Tribunal
M/S Sai Security Services vs Cc, Ce & St, Hyderabad-I on 9 August, 2016
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL REGIONAL BENCH AT HYDERABAD Division Bench Court I Appeal No. ST/432/2008 (Arising out of Order-in-Original No. 8/2008-S.Tax-Commr dt. 16.04.2008 passed by CC & CE, Hyderabad-III) For approval and signature: Honble Ms. Sulekha Beevi, C.S., Member (Judicial) Honble Sh. Madhu Mohan Damodhar, 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 Lordship wish to see the fair copy of the Order? 4. Whether Order is to be circulated to the Departmental authorities? M/s Sai Security Services ..Appellant(s) Vs. CC, CE & ST, Hyderabad-I ..Respondent(s)
Appearance Ms. Asmita A. Nayak, Advocate for the Appellant.
Sh. Arun Kumar, Deputy Commissioner (AR), for the Respondent.
Coram:
Honble Ms. Sulekha Beevi, C.S., Member (Judicial) Honble Sh. Madhu Mohan Damodhar, Member(Technical) Date of Hearing: 09.08.2016 Date of Decision: 09.08.2016 FINAL ORDER No._______________________ [Order per: Sulekha Beevi, C.S.] The brief facts are as follows:
The appellant is a proprietorship firm rendering among other services, the services pertaining to Security Agencies. The appellant is duly registered with the service tax department vide registration certificate dated 24.11.1998. Apart from this, the appellant is also rendering various other services, which are not falling under the purview of security services Viz., maintenance work, job of parking attendant, housekeeping etc.,
2. The department took the view that the appellant was rendering Security agency services to the tune of Rs. 2.50 crore (approx) per annum, however service tax was not discharged on the entire amount so received. Hence a SCN dated 04.07.2006 was issued to the appellant proposing recovery of amount of Rs.54,38,480/-, Rs.9432/- and Rs.24,682/- towards service tax on the amounts received by them during the period 2001-2002 to 9/2005, along with interest thereof and imposition of penalties. On adjudication vide Order-in- Original 16.04.2008 the proposals in the SCN were confirmed. Hence this appeal by the appellant.
3. During the hearing the Ld. Advocate appearing on behalf of appellant Ms. Asmita A. Nayak submitted that the SCN and the demand is based on wrong surmise by the department that all the services provided by appellant are in the nature of security agency services. She pointed out that security services was only one of the many services that were being provided by the appellant. The other services being maintenance work, parking attendant etc. She placed reliance on the clarification on frequently asked questions (FAQs) wherein it has been clarified by Board that services other than those related to Security services are not liable for service tax in that category. She submitted certificates of Sri Venkateswara Engineering College dated 16.03.2006, order of Commissioner GHMC dated 26.09.2007 letter of Muncipal Corporation of Hyderabad dated 28.06.2005, Agreement for maintenance of golf course of Dr. Reddys Laboratories, bills and receipts raised during the impugned period to illustrate that the services provided to said recipients were other than security agency services. The Ld. Advocate further pointed out that service tax was imposed on Man Power Supply Services only w.e.f 16.06.2005. The Ld. Advocate also contended that the department was without legal basis in seeking to include salary and other basis in taxable value.
4. She placed reliance on the following case laws:
(i) Cosmos Detective & Security Services Vs C of ST, Ahmedabad [2010 (17) S.T.R. 575 (Tri.-Ahmd)]
(ii) Maruthi Detective & Security Agency Vs C of C.EX, Belgaum [2006 (3) S.T.R. 521 (Tri.-Bang)]
(iii) The People Choice Vs Commr of ST, Bangalore [2011 (21) S.T.R. 385 (Tri.-Bang)]
(iv) Ex-Servicemen Industrial Guards Pvt Ltd., Vs CCE, Trivandrum [2009 (16) S.T.R. 421 (Tri.-Bang)]
(v) Gujarat Intelligence Security Vs Commr of CE, Vadodara [2010 (19) S.T.R. 270 (Tri.-Ahmd)]
(vi) CCE & C, Vadodara-I Vs Gujarat Intelligence Security (INDIA) [2011 (24) S.T.R. 167 (Guj)]
(vii) Malabar Management Services Pvt Ltd., Vs C of ST, Chennai [2008 (9) S.T.R. 483 (Tri.-Chennai)]
5. On behalf of department, the Ld. AR, Mr. Arun Kumar reiterated the findings in the impugned order. He submitted that the appellant has declared in the Income Tax returns that the income is received from security services, and that therefore the demand is legal and proper.
6. Heard both sides.
7. From the submissions made before us and the documents adverted to by the counsel for appellant it is plain that the appellant did indeed provide services other than security services. It also emerges that the other services provided by the appellant were definitely not subject to service tax for major portion of the period under dispute. This is evidenced by the clarifications given by the CBEC in the FAQs issued by them in 2003, the relevant portion of which is extracted below:
Q. 5 Are any services provided by the Security Agency exempted from payment of Service tax? Ans. Yes, the services provided by the security agency in relation to the services of providing safe deposit lockers or safe vaults for security of movable property are exempted from payment of service tax. Q. 6 When a Private Security Service also provides labour or manpower for activities not related to security services, whether such service is liable to service tax? Ans. The Security Agency merely supplying labour and manpower for any purposes other than providing security services is not liable for service tax since it does not fall under the category of security service which is irrespective of the fact that they may get covered as manpower recruitment agencies. Q. 7 The Security Agencies, sometimes during the course of their business, undertake services of collection of dues from loanees, credit card holders, etc. Are these services liable for Service Tax? Ans. Taxable services rendered by the scope of security agency is restricted to a service provided in relation to the security of any property or person. The activities of collection of dues, etc., do not fall in the ambit of providing security to any property or person. Therefore, these activities are not covered by the levy of Service Tax.
8. It is further seen that out of the other services provided by appellant, manpower supply services was made taxable from 16.06.2005. Hence at the most only for the period from 16.06.2005 on wards, till September 2005 could there arise service tax liability on the said services and also for any other service provided by them which were not taxable earlier but were later brought into the net with effect from 16.06.2005.
9. Regarding the inclusion of salaries paid by the appellant in taxable value it is seen that a number of Tribunal decisions have clearly held that staff salary and infrastructure expenses are required to be abated, for eg; Gujarat Intelligence Agency Vs CCE, Vadodara [2010(19) STR 270 (Tri-AHMD)], Malabar management Services Pvt. Ltd Vs CST Chennai [20007 910) LCX 0197]. In view of discussions above we hold as follows:
i. Value of services other than Security Agency Services cannot be included under the taxable value of the latter.
ii. Staff salary and infrastructure expenses cannot be included in the taxable value for determination of service tax liability iii. Services other than security services, provided by appellant during the period covered by SCN viz; 2001-2002 to 2005-2006 (upto 9/2005), eg; Manpower supply service will be subject to service tax liability only w.e.f. 16.05.2005.
10. We are therefore of the considered view that to enable reworking/ recomputation of the service tax liability [based on (i) to (iii) above] that has to be discharged by the appellant, the matter requires to be remanded to the adjudicating authority for denovo adjudication, which we hereby do. Appeal allowed on above terms.
(Operative part of this order was pronounced in court
on conclusion of the hearing)
(MADHU MOHAN DAMODHAR) (SULEKHA BEEVI C.S.)
MEMBER(TECHNICAL) MEMBER(JUDICIAL)
Jaya.
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