Commissioner of Central Excise & ST Vs Jalaram Security Services (CESTAT Ahmedabad)
The appellant provided security services during the period 2001 to 2005-06 and paid service tax only on the commission, after excluding amounts towards salary of security guards, PF and ESI. The Revenue contended that service tax was payable on the gross amount charged for the security services, including salary, PF and ESI, and raised a demand of differential service tax invoking the extended period.
The appellant contended that the amounts towards salary, PF and ESI represented actual expenses reimbursed by the service recipient and were therefore not liable to service tax. It was also submitted that the appellant had regularly paid service tax on the commission portion and filed periodical returns, and hence there was no suppression of facts warranting invocation of the extended period.
CESTAT Ahmedabad examined the provisions of Section 67 and held that the gross amount charged towards providing the security service was liable to service tax. The Tribunal observed that the salary of security guards, PF and ESI were not expenditures incurred by the appellant on behalf of the service recipient. The service recipient was concerned with the overall provision of security service, irrespective of the bifurcation of payment. Accordingly, the Tribunal held that these amounts could not be treated as reimbursable expenditures deductible from the gross value of the security service.
