By TIOL News Service

MUMBAI, JULY 28, 2015: THE appellant is a service provider. An audit was conducted wherein it was observed that the appellant was providing security agency services for which they are registered and they are also providing other services like lift operation services, labour supply services, cleaning services, driver services, telephone operator services and certain other house-keeping services. The Revenue also observed difference in gross value of taxable service as shown in ST-3 returns vis-à-vis turnover as per Books of Account.

The Service Tax demanded under SCN dt. 21.12.2012 for the period 2011-12 is tabulated below :

The appellant has also made a pre-deposit of Rs.51,56,492/- before issue of SCN and same has been appropriated. The CST, Mumbai-II confirmed the demand and imposed equivalent penalty.

Before the CESTAT, the appellant urged that the issue involved in the present appeal at Sr. No. 1, 2 & 3 are similar as in the prior period April, 2008 to March, 2011 and are covered by the order of the Tribunal in their own case being final order No. 550-557 dated 11.4.2014 - 2014-TIOL-755-CESTAT-MUM and further they had admitted and paid the ST liabilty against the following services before issue of SCN as below -

In the matter of the ST demand raised under the other heads, it is submitted that the adjudicating authority had not disputed the nature of services being rendered by the appellant whether being non-taxable services in the form of cleaning services to non-commercial organizations or the services provided to SEZ units but the only objection raised is that the appellant has failed to produce documents in support of their claim. Right from the beginning, the appellant had claimed that the issue in the present period are identical to the issue raised in the earlier show-cause notice (prior period) which formed part of the Order-in-Original dated 12.11.2012 [and which has been decided by the Tribunal - 2014-TIOL-755-CESTAT-MUM]. However, while dealing with the present show-cause notice, the Commissioner had ignored the factual details/aspects and has brushed aside the submission and also held that the earlier order of the Tribunal is of no help to the appellant;

that the impugned order passed by Commissioner is cryptic and in gross violation of principles of natural justice.

The AR submitted that out of the 5 issues arising in this appeal, 4 issues, except point of taxation matter, stand concluded by the earlier order of this Tribunal in the appellant's own case;that the point of taxation issue is new one as per the change in the provisions of law, tax is payable for the current period on accrual basis; However, the appellant have paid the tax on receipt basis and, therefore, they have to pay the differential amount; for quantification, the matter can be remanded.

The Bench noted that the order of the Tribunal dated 11.4.2014 - 2014-TIOL-755-CESTAT-MUM for the earlier period has been accepted by the Revenue.

It was further observed -

+ As per certificate of the C.A. produced by the appellant before the court below as well as this Tribunal, the total value of such services (non-taxable) is Rs.40,00,99,350/- for the disputed period. The learned C.A. has certified that the figure of turn over is correct as per the Books of account maintained. It is further seen that no specific head of service category has been proposed in the show-cause notice nor confirmed in the impugned order. Thus, the show-cause notice as well as the impugned order are vague.

+ As regards classification, it is settled law that classification of taxable service must be specified in the show-cause notice in order to fasten liability of Service Tax. It is further seen that for the earlier period the demand in respect of such services were dropped by the adjudicating authority vide Order-in-Original dated 12.11.2012. The appeal of the Revenue have been dismissed by this Tribunal vide earlier final order dated 11.4.2014 - 2014-TIOL-755-CESTAT-MUM wherein the issue have been considered at length. The issue stands concluded as earlier order of Tribunal has been accepted by the Revenue. Thus, it is held that the appellant is not liable to Service Tax in respect of the non-taxable services mentioned herein above, the gross value of which totals Rs.40,00,09,350/- and accordingly, the demand of Rs.4,12,00,963/- is set aside.

+ We also take notice of the fact that in the earlier Order-in-Original dated 12.11.2012 for the prior period, the adjudicating authority has confirmed demand only in respect of cleaning services provided to Private Educational Institution and Private Hospital. Further, the demand with respect to cleaning services provided to Govt. organizations, Agriculture, Horticulture was dropped, being not taxable. It is further noticed that the appellant have paid Service Tax suo motu even before the issue of show-cause notice on the value of cleaning services provided to 'Private Hospitals, Private Educational Institutions, Charitable Hospital and Institutions. Thus, we hold that the demand of Rs.2,94,55,469/- towards cleaning services is erroneous and is accordingly set aside. The admitted liability of tax, is the actual liability of Rs.20,90,285/-, have already been discharged before issue of show-cause notice.

+ So far as the 'service provided to SEZ' is concerned, vide Notification No. 17/2011, it is provided that the services wholly provided within the SEZ unit are exempted from whole of Service Tax. However, in order to claim exemption, the service provider must have approval from the Approval Committee of SEZ and also produce the prescribed documents. In respect of 26 SEZ units, demand of Rs.30,68,290/- have been confirmed against the appellant. In the course of hearing, the appellant produced the prescribed form along with the approval from the Approval Committee in respect of the SEZ units and a certificate from a CA certifying that security services valued at Rs.31,97,986/- was provided to Punj Lloyd under the head, 'services provided to SEZ units during 2011-12. Thus, it is evident that the appellant have provided services to the SEZ units and accordingly the demand of Rs.30,68,290/- attributable on this account is set aside.

+ So far as the issue of difference in value of services as per ST-3 returns and balance-sheet due to introduction in point of Taxation Rules, 2011 w.e.f. 1.4.2011, the liability to discharge Service Tax was shifted from the receipt basis to accrual basis. It is evident that the liability on accrual basis has been discharged, on the difference in the value of the services for the prior period also and therefore, the same were not included in the gross value, determined for ST-3 returns for 2011-12. Further, in view of the fact that no specific category or classification is mentioned either in the show-cause notice or in the impugned Order-in-Original, we deem it just and proper and accordingly, set aside the demand of Rs.58,09,961/-.

+ So far as the issue of 'reimbursement of expenses' which have been taxed, it is seen that the appellant have voluntarily deposited Rs.31,37,207/- out of the total demand on this count as Rs.34,64,339/- prior to issue of SCN; this small difference of about 10% being Rs.3,23,132/- is attributable to erroneous computation by Revenue by considering the gross value of service as exclusive of Service Tax instead of considering the same as inclusive of Service Tax.

+ Holding that since the appellant discharged Service Tax liability before issue of SCN they are entitled to the benefit of s.73(3) of the FA, 1994, penalties imposed u/ss 77 and 78 were set aside.

The appeal was allowed with consequential relief, if any.

(See 2015-TIOL-1546-CESTAT-MUM)