SUPER SECURITY SERVICE Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) This appeal arises from Order -in -Appeal No. 109/2002, dated 25 -6 -2002 by which the Commissioner (Appeals) has confirmed the demand on the appellants under Service Tax Act treating the appellant as security agency in terms of show cause notice dated 8 -1 -2001 issued to them under Clause (a) of Section 73 of the Finance Act 1994. In the impugned order, he has come to the conclusion that the appellants have not intended to evade payment of service tax under Section 78 and that department has not proved on their part to show that the appellants had intention to evade payment of service tax. He has held that no mala fide intention has been proved and on that count he has set aside the penalty. He has confirmed service tax without coming to any decision as regards valuation and deduction. However, he affirmed tax on gross value in the impugned order. He has noted that appellants were security agency but the department directed them to register themselves under the Man Power Recruiting Agency. Appellants had corresponded on this issue and contended that they will not come under man power recruiting agency. In due obedience with the department's direction, they registered under the Man Power Recruitment Agency vide ST Registration No. 687S/97, dated 7 -10 -97 and started filing returns in that category. They also sought eligible deductions as man power recruitment agency which was provided under Trade Notice No. 101/98, dated 13 -10 -98 of Madurai Commissionerate and CBEC Circular F. No. B -11/3/98, dated 7 -10 -1998 provided few certain deductions. The Board Circular F. No. 13 -43/5/97 -TRU, dated 2 -7 -1997 which stated vide Para 2.3 actual expenses reimbursed to be based on documentary evidence to claim deductions from gross value. Such deduction was not allowed by the lower authority. Due to this dispute correspondence has taken place and the returns had been filed in the format provided under law as Man Power Agency. Subsequently, they got registered themselves as Security Agency only from 8 -2 -2001 vide registration 3/ST/2001. During the entire disputed period, the department assessed them only under Man Power Recruitment Agency. Therefore, the Commissioner (Appeals) held that the department was aware of the fact that they were filing the returns under Man Power Recruitment Agency even though they are security agents. He has noted that department had not objected till that time their continuation in Man Power Recruitment Agency. The definition of value for in relation to service provided by Security Agency to a client shall be the gross amount charged by such agencies from the client. He has noted that no deductions from this gross amount charged are permissible to determine the value for the purpose of levy. He has noted that the Ministry had issued certain instructions permitting certain deductions to the security service providers. However, he has noted that he is not in a position to come to any conclusion or decision as regards the valuation or deduction but he reaffirmed the gross value. He set aside the penalty as there was no mala fide intention.

(2.) We have heard learned Advocate Shri Rajkumar Appasamy for the appellants and learned SDK Smt. R. Bhagya Devi for the Revenue.

(3.) Ld. Advocate contended that the demand raised is not justified in the matter in terms of Section 73(a) as there was no failure or omission on their part to file a return under Section 70 of the Finance Act, 1994. He pointed out that the demand for service tax for five years from the date of show cause notice is also not sustainable in the light of Commissioner's finding that they had no mala fide intention to evade service tax and also for the reason that department insisted on their filing returns as Man Power Recruiting Agency. He submits that as the liability to pay service tax as security agency did not arise, therefore, the show cause notice issued by the department is not sustainable.