TMI Blog2019 (8) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... ards the PF and deposit the same with the Central Government. The appellant in this case claimed that it has deducted the contributions on behalf of principal employer, that is recipient of the service, for remittance to the competent authority in terms of the provisions of EPF and ESI Act. The contributions made towards PF ESI is, therefore, not required to be added for the purpose of calculation of the gross amount under Section 67 of the Act, if the same has been deposited with the Government. Thus, the contributions made towards EPF and ESI are not liable to be included for the computation of gross amount under Section 67(1) of the Act. Abatement towards deduction of wages and salaries paid to the personal employees by the appellant - HELD THAT:- The same is covered by the decision of Mumbai Bench of this Tribunal in case of SECURITY GUARDS BOARD FOR GREATER BOMBAY THANE DIST. VERSUS COMMISSIONER OF CENTRAL EXCISE, THANE [ 2016 (12) TMI 859 - CESTAT MUMBAI] , wherein it is held that wages and allowance including salary and administrative charge collected from client is excludible from the gross value of taxable service in terms of Section 67 of the Act - the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vaidya Associates and, therefore, they were also summoned to furnish the records by letter dated 25.8.2011. The statement of accounts of the appellant for the relevant period i.e. 2007-2008, 2008-2009, 2009-2010 and 2011 (up to August, 2011) was also downloaded from National Securities Depository Limited (NSDL) website who were authorized by the department to maintain data pertaining to the payment particulars of service tax on an all India basis. Subsequently, the statement of Shri Lakhanlal Soni, proprietor of the appellant, was recorded on 25.8.2011, wherein he admitted that he has not paid full service tax on gross receipts from their clients, even though recovered. The DGCEI also conducted enquiry from various clients of the appellant viz. M.P. Tourism Development Corporation Limited; the National Institute of Fashion Technology; Central Institute of Plastic Engineering and Technology; Ansal Housing Construction Limited; M.P. State Agricultural Marketing Board; Office of Executive Engineer; Water Resources Division, Bhopal; National Seed Corporation, M.P; Aids Control Society; and Office of the Accountant General (Works Receipt), M.P. The clients informed that they have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act, and thus a fit case for invocation of Section 80 of the Act for waiver of penalty. It was also, therefore, submitted that the extended period of limitation is not applicable. Learned Advocate placed reliance on the following decision in support of non-invocation of extended period of limitation. (i) Commissioner of Central Excise, Chandigarh Vs. Punjab Laminates Pvt. Ltd. 2006 (202) ELT 578 (SC); (ii) Commissioner of Central Excise, Ahmedabad-I Vs. M. Square Chemicals 2008 (231) ELT 194 (SC); (iii) Mahakoshal Beverages Pvt. Ltd. Vs. Commissioner of Central Excise, Belgaum 2007 (6) STR 148 (Tri.-Bang.); (iv) Commissioner of Central Excise Cus. Belgaum Vs. Mahakoshal Beverages Pvt. Ltd. 2014 (33) STR 616 (Kar.). 3.2 Learned Advocate also pleaded that as the service tax itself is not payable for the major portion of demand, the interest and penalty is also not imposable. 4. Learned Authorised Representative, however, rebutted the submission made by the learned Advocate on the ground that the appellant has recovered the service tax from their clients and failed to deposit the same to the Exchequer. He supported the findings contained in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... establishment; or (iii) whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service; 17 and includes any person employed for wages on any work connected with the administration of the factory or establishment or any part, department or branch thereof or with the purchase of raw materials for, or the distribution or sale of the products of, the factory or establishment 18 or any person engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961), or 19 and includes such person engaged as apprentice whose training period is extended to any length of time but does not include (a) any member of 20 the Indian naval, military or air forces; or 21 (b) any person so employed whose wages (excluding remuneration for overtime work) exceed 22 such wages as may be prescribed by the Central Government a month: Provided that an employee whose wages (excluding remuneration for overtime work) exceed 22 such wages as may be prescribed by the Central Government at any time after (and not before) the beginning o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e specified in the regulation till the date of its actual payment: Provided that higher interest specified in the regulations shall not exceed the lending rate of interest charged by any scheduled bank. (b) Any interest recoverable under clause (a) may be recovered as an arrear of land revenue or under section 45C to section 45-I. Explanation.-In this sub-section, scheduled bank means a bank for the time being included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934); Section 40 - Principal employer to pay contribution in the first instance (1) The principal employer shall pay in respect of every employee, whether directly employed by him or by or through an immediate employer, both the employer s contribution and the employee s contribution. (2) Notwithstanding anything contained in any other enactment but subject to the provisions of this Act and the regulations, if any, made thereunder, the principal employer shall, in the case of an employee directly employed by him (not being an exempted employee), be entitled to recover from the employee the employee s contribution by deduction from his wages and not otherwise: Provided that no suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person who, or the authority which, has been ultimate control over the affairs of the establishment, and where the said affairs are entrusted to a manager, managing directing or managing agent, such manager, managing director or managing agent;](f) employer means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of 3[an establishment] and who gets his wages directly or indirectly from the employer, 4[and includes any person,- (i)Employed by or through a contractor in or in connection with the work of the establishment; (ii)Engaged as an apprentice, not being an apprentice engaged under the Apprentice Act, 1961 (52) of 1961) or under the standing orders of the establishment]; [8.Mode of recovery of money due from employers.-Any amount due-(a)From the employer in relation to 2[an establishment] to which any 33[Scheme or the Insurance Scheme] applies in respect of any contribution payable to 4[the Fund or, as the case may be, the Insurance Fund,] damages recoverable under section 14B, accumulations required to be transferred under sub-section (2) of section 15 5[or under sub-section (5) if section 17] or any charge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of such service under Section 67 of the Act. Therefore, there is no authority provided in the law for subjecting these contributions to service tax under Section 67 of the Act. 7. The provisions of the PF and ESI Act makes it clear that it will be the primary responsibility of the principal employer to deduct amount towards the PF and deposit the same with the Central Government. The appellant in this case claimed that it has deducted the contributions on behalf of principal employer, that is recipient of the service, for remittance to the competent authority in terms of the provisions of EPF and ESI Act. The contributions made towards PF ESI is, therefore, not required to be added for the purpose of calculation of the gross amount under Section 67 of the Act, if the same has been deposited with the Government. 8. The issue regarding valuation of taxable services has been the subject matter of decision of Hon ble Delhi High Court in case of Intercontinental Consultants Technocrats Pvt. Ltd. (supra), which has been affirmed by Hon ble Supreme Court as reported in 2018 (10) GSTL 401 (SC), wherein it is held that under provision of Section 67 (1) of the Act only serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e laid before each House of Parliament and that the House has the power to modify the rule. As pointed out by the Supreme Court in Hukam Chand v. Union of India, AIR 1972 SC 2427 :- The fact that the rules framed under the Act have to be laid before each House of Parliament would not confer validity on a rule if it is made not in conformity with Section 40 of the Act. Thus Section 94(4) does not add any greater force to the Rules than what they ordinarily have as species of subordinate legislation. 9. In view of above, the contributions made towards EPF and ESI are not liable to be included for the computation of gross amount under Section 67(1) of the Act. We also find that the similar issue had been come up for consideration before this Tribunal in case of Young Brothers Transporters and Contractors Vs. CCE, Meerut-I - 2017 (6) G.S.T.L. 513 (Tri. - Del.), wherein it is held that employer contribution towards PF, EPF, ESI into Central Govt. account is not required to be included for the purpose of a computation of gross amount for discharge of service tax liability. Paragraph 6 of the order, which is the relevant paragraph, is reproduced as under: 6. The Employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - The wage and other allowances payable to the registered Security Guards of the Board every month by the registered principal employer shall be remitted by the registered principal employers by cheque to Secretary, of the Board, within such time after the end of the month, as may be specified by the Board. The Secretary thereupon shall arrange to disburse the wages and other dues, if any to the registered Security Guards of the Board on specified days every month subject to deductions, if any, recoverable from them under the Scheme; Provided that the Board may, if it thinks fit, and subject to such conditions as may be laid down by it, allow a registered principal employer to pay directly to the Security Guards the wages and other allowances after making such deductions as may be authorized and recoverable from them under the Scheme, within such time and in such manner as may be specified by the Board. From the above clause, it is apparent that the wages and allowances are collected by the Board as an Agency for payment to the concerned persons/authorities. Therefore, the wages and allowances are excludible from the value of service tax. Thus, the taxable value for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
