The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has quashed the service tax demand on the amount received as pure agents or on the amount of reimbursement is also not sustainable.
The bench of Rachna Gupta (Judicial Member) and Hemambika R. Priya (Technical Member) has observed that the demand including the amount of reimbursement namely salary to cards, PF, ESI paid to security guards’ in the gross value is not sustainable.
The appellant, M/s. Sahara Ex-Servicemen Welfare Co-operative Society Ltd., is engaged in providing the taxable services under the category of ‘Security Agency & Manpower Recruitment/Supply Agency’.
During the course of audit of the appellant’s record, the officers of Central Excise Commissionerate, observed the difference between the value shown in the Balance Sheets and the value shown in the ST-3 returns for the period from 2010-11 to 2013-14.
On being enquired, the appellant informed that they had paid service tax only in those cases where they received amount in the name service tax from their clients. The department formed an opinion that the appellant were required to pay service tax on the entire taxable value of services provided or to be provided by them for the disputed period. While admitting their liability, the appellant though paid the service tax but only on 25% of the gross amount of consideration received by them availing the benefit of Notification No.30/2012-ST dated 20.03.2012.
The department alleged that the benefit of said notification is available only to an individual or Hindu Undivided Family or partnership firm, including the association of persons but the appellant does not fall under any of those categories, hence, was required to pay tax on the entire (100%) amount of the consideration received by them.
The show cause notice bearing was served upon the appellants proposing the recovery of short paid service tax along with the proportionate interest and the appropriate penalties in terms of Section 78 of the Finance Act, 1994.
The another Show Cause Notice was also served upon the appellants proposing the recovery of service tax that to along with the proportionate interest and the appropriate penalties.
The proposal of both the show cause notices have been confirmed.
The tribunal held that the appellant being a co-operative society was very much eligible for the abatement/exemption of 75% of the tax liability.
Case Details
Case Title: M/s. Sahara Ex-Servicemen Welfare Co-operative Society Ltd. Versus Commissioner of CGST, Customs and Central Excise – Alwar
Case No.: Service Tax Appeal No. 50668 of 2017 [DB]
Date: 23.01.2025
Counsel For Appellant: CA Keshav Gupta
Counsel For Respondent: Jayakumari
