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2019 (8) TMI 80

..... service tax on exempted services from their clients, various educational institute, but failed to deposit the same in the government exchequer - negative list regime - deduction of contribution towards EPF, ESI, salary and wages - section 67 of FA - HELD THAT:- The appellant is engaged in providing the services of manpower recruitment and supply services which has been brought into service tax net with effect from 2.7.1997 vide Section 85(68) read with 65(105)(k) of the Act - It is on record that the appellant has provided the services of manpower supply and security agency to various educational institutes and has been collected service tax during the relevant period i.e. from 2009 to Feb. 2014. The appellant has agreed to the fact that they have not deposited the service tax collected from the educational institute which was not required to be collected in terms of the exemption notification. The demand confirmed by the impugned order is required to be re-quantified after giving abatement towards the salary and wages and the contribution made towards EPF and ESI - the entire amount of the duty of service tax collected is required to be deposited with service tax, department which .....

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..... h as bill cum receipt register and ledger account of the various clients it appeared that the appellant had been providing services to some of the educational institutes viz. Indian Institute of Technology, Patna; National Institute of Electronics and Information Technology; Calicut; Central University of Rajasthan, Ajmer; Central Arid Zone Research Institute, Jodhpur; National Institute of Technology, Agartala; Indian Institute of Management, Kozhikode etc. It also appeared that the appellant have collected service tax from these institutes even after introduction of negative list which exempted the services to such educational institute as per Notification No. 25/2012-ST dated 20.6.2012 with effect from 1.7.2012. Various other statements were recorded from the other appellant, Shri J.S. Kalsi, who subsequently also agreed that the company has merged with another company and would be clearing the service tax dues at the earliest. Subsequently, following payments were made Challan dated 4.4.2014 - ₹ 2 lakhs Challan dated 7.4.2014 - ₹ 3 lakhs Challan dated 8.4.2014 - ₹ 1 lakh Challan dated 1.9.2014 - ₹ 5 lakhs Challan dated 7.10.2014 - ₹ 20 lakhs These .....

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..... /- from the educational institute and already paid service tax to ₹ 20,87,891/- as per ST-3 returns and the remaining amount has also been paid by the appellant. The learned adjudicating authority has erred in imposing penalty under Section 78 of the Finance Act on the ground that a show cause notice not invoked the provisions of Section 73A of the Act and hence imposition of penalty is in the show cause notice. It was also submitted that the provisions of Section 78 of the Act are not applicable in case where service tax has been collected which is not chargeable and not deposited to the Government exchequer. In this regard, reliance was placed on the decision of Hon ble Punjab & Haryana High Court in case of Ajay Kumar Gupta Vs. CESTAT - 2015 (39) STR 736 (P&H), wherein it is held that once the assessee was not liable to pay under provisions of 68 of the Act, the penalty is not imposable under Section 76 of the Act. Further, penalty under 78 of Act also pertained to penalty for suppressing of value of the taxable services. Once the service tax was not leviable under Section 68 of the Act and the liability was only to deposit service tax under Section 73A(2) of Act i .....

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..... f Section 67 both prior to 1.7.2012 and with effect from 1.7.2012 which is reproduced as under; Prior to 1.7.2012 67. Valuation of taxable services for charging service tax (1) Subject to the provisions of this Chapter, service tax chargeable on any taxable service with reference to its value shall,- (i) in a case where the provision of service is for a consideration in money, be the gross amount charged by the service provider for such service provided or to be provided by him; (ii) in a case where the provision of service is for a consideration not wholly or partly consisting of money, be such amount in money, with the addition of service tax charged, is equivalent to the consideration; (iii) in a case where the provision of service is for a consideration which is not ascertainable, be the amount as may be determined in the prescribed manner. (2) Where the gross amount charged by a service provider, for the service provided or to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as, with the addition of tax payable, is equal to the gross amount charged. (3) The gross amount charged for the taxable service shall include any amo .....

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..... may be prescribed Explanation - for the purposes of this section, - (a) Consideration includes any amount that is payable for the taxable services provided or to be provided; (b) * * * (c) gross amount charged includes payment by cheque, credit card, deduction from account and any form of payment by issue of credit notes or debit notes and book adjustment, and any amount credited or debited, as the case may be, to any account, whether called Suspense account or by any other name, in the books of account of a person liable to pay service tax, where the transaction of taxable service is with any associated enterprise. 8. Similarly, the provisions of 65(B)44 of Finance Act with effect from 1.7.2012 which is relevant is also reproduced as under: Section 65B(44) Service means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include (a) An activity which constitutes merely,- (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be sale within the meaning of clause (29A) of article 366 of the Constitution .....

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..... nt will not take into consideration the amount of contribution made by the service receiver M/s. HNGIL directly into the respective heads of account. Therefore, in our considered view, service tax demand cannot be confirmed on the employer s contributed amount towards P.F., E.P.F. and E.S.I. In this order the decision of Hon ble Tribunal in case of Neerv Jaisawal was also considered, which is referred in the impugned order and held to be inapplicable. In this regard, we also find that the Hon ble Allahabad High Court in the case of Security Services Vs. Union of India 16 (399) in Civil Writ Petition No. 437 of 1998 held that the respondent shall be entitled to charge service tax on the gross except after giving the abatement in respect of statutory levy and the tax is and if the same as the direct relation with the services rendered by the client and charged specifically in the bill. 10. As far as the abatement towards deduction of wages and salaries paid to the personal employees by the appellant is concerned, the same is covered by the decision of Mumbai Bench of this Tribunal in case of Security Guards for Greater Bom. & Thane Dist. Vs. CCE, Thane-II - 2017 (51) STR 51 (Tri. .....

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..... ade on behalf of the appellant. Regarding the imposition of penalty, we find that the same is settled in favour of appellant by the decision of Hon ble Punjab & Haryana High Court in the case of Ajay Kumar Gupta (supra). We also find that the decision of Hon ble Delhi High Court in case of Intercontinental Consultants (supra) has held that for arriving at the gross amount to be charged under Section 67 of the Act, only such amount is required to be included which is attributable towards the services rendered by the appellant, any other element, which is reimbursable in nature, is not required to be included for the purpose of computation of assessable value under Section 67 of the Act, as this decision has been upheld by the Supreme Court, we are of the view that the various statutory deduction the payment made towards salary and wages are, therefore, required to be deducted from the total amount charged by the appellant from the service recipient for the rendition of the service. Thus, the charges attributable to the service element can only to be considered in the gross amount charged. It is, therefore, held that the demand, as confirmed in the impugned order, is required to .....

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