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2013 (2) TMI 356 - HC - Service TaxConstitutional validity of Section 67 - Expenses and salary paid to the Security Guards by Security Agency – Petitioner’s Challenge is against fixation of the value of ‘taxable service’ under Section 67, reckoning the ‘Gross amount, without segregating the expenses towards salary and statutory payments under the ESI/EPF, which constitute the major portion of the total figure involved - Contention of the petitioner is that they are virtually ‘Man Power Recruiting Agents’ and that their service should be valued on the quantum of the commission they receive – Held that:- How the tax has to be realised, what should be the manner of imposition, what should be the extent of liability to be mulcted upon, who are the persons/class/individuals to be brought within the service tax net etc., are matters for the Government to decide, as a measure of policy. It is in furtherance of the said policy, that the law has been enacted by the Parliament by virtue of the power conferred upon it as per the residual entry, i.e., Entry 97 of List I of the Seventh Schedule. As observed in T.N. Kalyana Mandapam Assn. v. Union of India and Others[2004 (4) TMI 1 - SUPREME COURT OF INDIA] it is well settled that the ‘measure of taxation’ cannot affect the nature of taxation and therefore, the fact that service tax is levied as a percentage of the gross charges for catering, cannot alter or affect the legislative competence of the Parliament in the matter. Further Man Power Recruiting Agency service is a separate entity which was brought within the Service Tax Net w.e.f. 7-7-1997 as per the Finance Act, 1997, whereas the Security Agency Service was brought in for the first time only w.e.f. 16-10-1998, as per the Finance Act, 1998. Both the above terms have been separately defined under Section 65 – In the case of the latter, the Security Agency is the ‘Employer’ of the security personnel deployed to cater to the requirements of the service receivers, for which the service receivers effect the payment to the service providers, as per the terms of the contract – The ‘Master and Servant relationship is between the Security Agency and the Security Personnel engaged and not between the Service Receivers and the Security Personnel. The service providers are very much authorised and entitled to pass on the liability towards salary and statutory payments to the ‘Service Receivers’ by raising the Bills including such amounts payable as Service tax. The role of the Security Agencies like the petitioners is only to act as ‘agents’ in the matter of collection of Service tax. - Decided in favor of revenue.
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