SUDHARSON SECURITY BUREAU Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellants M/s. Sudharson Security Bureau (SSB, short) had got themselves registered as 'Man Power Recruiting Agency' on 12.09.1997 and were paying service tax accordingly. After 'Security Agency' was introduced in the Finance Act, 1994 for the purpose of levy of service tax (16.10.1998), M/s. SSB were required to take fresh registration in this category and accordingly they obtained registration as a Security Agency on 22.11.1999. But they continued to pay service tax in the category of 'Man Power Recruiting Agency' from 16.10.1998 to 30.09.1999. As they felt that they were not liable to pay service tax in this category from 16.10.1998 to 30.09.1999, they claimed refund of the tax. The original authority rejected this claim and appropriated the tax paid by the party for the said period in the category of 'Man Power Recruiting Agency' towards the tax which ought to have been paid in the category of 'Security Agency'. The claim for refund of tax paid for the period prior to 16.10.1998 was rejected as time -barred. M/s. SSB filed an appeal with the Commissioner (Appeals). The appellate authority held, in respect of the refund claim for the period prior to 16.10.1998, that the claim was not time -barred as the tax had been paid under protest. It directed the lower authority to refund the tax subject to verification for unjust enrichment. As regards the refund claim for the remaining period, apparently, the decision of the original authority was upheld. Appeal No. S/15/2001 is against the rejection of refund claim for the period 16.10.1998 to 30.09.1999. This appeal is on the following grounds:

(2.) AFTER hearing both sides and considering their submissions, we find that the service tax for the period 16.10.1998 to 30.09.1999 was paid in the category of 'Man Power Recruitment Agency' whereas the same was payable in the category of 'Security Agency'. Admittedly, the tax amount of Rs. 10,995/ - was due to the Central Government from the assessee as 'Security Agency'. The said amount of tax had been wrongly collected in the category of 'Man Power Recruitment Agency' and hence liable to be refunded. In the circumstances, the provisions of Section 11 of the Central Excise Act, as applicable to service tax matters, were invocable. The learned Counsel for the appellants has also fairly conceded the applicability of Section 11 of the Central Excise Act. Under this provision, as applied to the facts of this case, it was open to the original authority to deduct any amount of service tax payable by the assessee as 'Security Agency' from any amount of service tax refundable to him by reason of this amount having been wrongly collected in the category of 'Man Power Recruitment Agency'. This is precisely what was done by the original authority in the present case. Hence the appropriation of Rs. 10,995/ - (claimed as refund) as the service tax towards 'Security Agency' is in accordance with law and the same cannot be challenged on the aforesaid grounds. In the result, Appeal No. S/15/2001 gets dismissed.

(3.) THE remaining appeal is against demand of service tax of Rs. 1,08,781/ - for the period 16.10.1998 to 31.05.2000. The demand has been challenged on merits as well as on limitation. A show -cause notice dated 23.11.2000 was issued for recovery of the above tax under Clause (a) of Section 73 of the Finance Act, 1994 with interest under Section 75 of the Act. It also proposed penalties on the party under Sections 76 and 78. The show -cause notice alleged that expenses like wage, ESI/EPF subscriptions etc., were also part of the value of the taxable service for payment of service tax and that, by deducting these elements from the taxable value and suppressing this fact before the department, M/s. SSB was liable to pay differential tax to the Central Government within the extended period of limitation. The party, in their reply, claimed that the above reimbursable expenses were not includible in the value of taxable service. They relied on CBEC's Circular No. 341/43/96 -TRU dated 31.10.1996 which, in relation to advertising agency, clarified that reimbursable expenses were not includible in the value of taxable service. The original authority rejected the assessee's contentions and confirmed the demand of service tax against them for the period 16.10.1998 to 31.05.2000 and imposed on them penalties of Rs. 100 per day and Rs. 1,08,781/ - under Sections 76 and 78 respectively. The first appellate authority sustained the demand of service tax but set aside the penalties. The present appeal is against the demand of service tax.