GURUVAYURAPPAN SECURITY BUREAU Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) This appeal arises from Order -in -Appeal No. 111/2002 (MDU) (GVN), dated 25 -6 -2002 by which the Commissioner (Appeals) has confirmed the demand on the appellants under the Service Tax Act treating the appellant as security agency in terms of show cause notice dated 20 -10 -2000 issued to them under Clause (a) of Section 73 of Finance Act, 1994. In the impugned order, he has come to the conclusion that appellants have not intended to evade payment of service tax under Section 78 and the department has not proved on their part to show that the appellants had intention to evade payment of service tax. On that count, he has set aside penalty. He has confirmed the 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 the appellants were security agency but the department directed them to register themselves under Man Power Recruiting Agency. Appellants had corresponded on this issue and contended that they will not come under Man Power Recruiting Agency. However, the Superintendent, North Range, Madurai vide his OC No. 1125/97 dated 18 -8 -97 insisting on them filing of the returns and pay tax as Man Power Recruiting Agency. They were also given deductions in terms of Board's circular. However, after a period of time the department searched their premises and issued show cause notice seeking to recover service tax on the appellants as security agency which they had got themselves registered only from 22 -10 -99. The Commissioner has noted that the department was aware of the fact that they were filing returns under Man Power Recruiting Agency even though they were security agency. He has noted that department has not objected till this time their continuing in Man Power Recruiting Agency. On that count, he set aside penalty but confirmed service tax on gross value without coming to any conclusion or decision as regards valuation and deductions.

(2.) Ld. Advocate contended that the demands 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 Commissioner has accepted their plea that it was the department who had directed them to register themselves as Man Power Recruiting Agency and to file return and pay tax accordingly. He submitted that as there was no intention on their part to evade service tax, the question of their paying tax from 16 -10 -98 to 31 -5 -2000 does not arise. He points out that the appellants have already deposited Rs. 1,35,000/ - which has been noted in the stay order. He submits that as the liability for them to pay service tax as security agency did not arise, show cause notice issued by the department under Section 73(a) of the Finance Act is not sustainable.

(3.) Ld. SDR files a written note and comments received from the department. She submits that the appellants were aware of the fact that they were security agency and, therefore, they ought to have filed the returns from the time of inception and paid tax accordingly. Therefore, she submits that the impugned order is sustainable.