COMMISSIONER OF C. EX. Vs. COMMANDER SECURITY SERVICES

JUDGEMENT

(1.) THE brief facts of the case are M/s. The Commander Security Services (hereinafter referred to as "assessee") a proprietary concern of Major (Retd.) P.G. Daval was providing security guards to M/s. BSNL for security of their immovable and movable properties. As per the terms of agreement between BSNL and the assessee, BSNL was to pay the salary of the guards + 10% as the service charges to the appellants. The entire amount was billed by the assessee and was paid by BSNL to the assessee. From the said amount the assessee, was paying the salary to the security guards and retaining 10% service charges as their profit. Assessee was paying Service Tax on the service charges alone. Show cause notice was issued to the assessee demanding duty on the gross amount received. The details were taken from the balance sheet, the demand was for the period 2002 -03, 2003 -04 & 2004 -05. The demand notice was issued on 17 -4 -2006. The assessee contested the demand. However, the original adjudicating authority confirmed the demand. During the adjudication proceedings, the assessee claimed that he is only a supplier of labour/manpower and is a labour contractor and liable to pay the service tax only on the value of the service amount retained by him. Assessee also claimed that he is not providing any security service. He also contested the valuation method adopted by the department. Adjudicating authority however rejected these contentions and considered the services provided as the security services and held that the gross amount collected from M/s. BSNL which includes the salary of the guards would be taxable value for Service Tax purpose. Assessee filed appeal before Commissioner (Appeals) who vide impugned order rejected the assesses contention relating to the classification of the service and held that the service provided by the appellant are security services. However, Commissioner (Appeals) agreed to the assessee's contention as far as the value for computing the Service Tax is concerned. Commissioner (Appeals) took the view that appellant is required to pay the tax only on the service charges collected and not on the gross amount received. Against the said order the Commissioner (Appeals), both revenue as also the assessee are in appeal before us. Revenue is in appeal against the valuation method adopted by the Commissioner (Appeals). Assessee on the other hand is in appeal on the ground that the services provided by him is of Manpower Supply which were not taxable before 16 -6 -2005 and therefore appellant is not liable to pay Service Tax during the impugned period. Another contention of the assessee is that salary of security guards received by him is nothing but reimbursable expenses and therefore cannot form part of the assessable value. Consequent to the above mentioned order of the Commissioner (Appeals), assessee filed a refund claim before the original authority for the subsequent period which was rejected. The assessee filed an appeal before Commissioner (Appeals) against the said rejection order both on merits as also on unjust enrichment. Commissioner (Appeals) allowed the appeal of the assessee. Revenue is in appeal against the said order also on the ground that the principles of unjust enrichment would be applicable in the situation.

(2.) WE have also heard ld. AR on the various issues. Ld. A.R. stated that Commissioner (Appeals) has already upheld that assessee is providing security agency services and in the said service wages/all payments made to Security Guards will form part of assessable value. Learned AR quoted the following case laws:

(3.) THE first issue to be decided is whether the services provided by the assessee can be considered as security services or these are Manpower Supply Services. We have gone through the agreement between the assessee and M/s. BSNL. On going through the agreement it is very clear that assessee is required to provide security guards to M/s. BSNL. Security guards also expected to be in Army Uniform while on duty. The responsibility of character etc. of the guards remains with the assessee. Assessee is expected to submit bill including their wages to M/s. BSNL and BSNL in turn paid to the assessee. The fact that the assessee is expected to disburse the amount of wages in presence of BSNL official will not made a difference on the nature of service or amount of Service Tax to be paid. Similarly, the way bill is prepared (i.e. wages plus service charges) will not make any difference in the nature of service or amount of Service Tax to be paid. The whole nature of activity leaves no doubt that the services provided by the assessee is the security services. The security agency is defined under the Service Tax as under: