Valuation of Taxable Service

CESTAT, New Delhi Bench

Magnum International

v.

Commissioner of Central Excise, Bhopal

R.K. ABHICHANDANI, PRESIDENT

AND K.C. MAMGAIN, TECHNICAL MEMBER

STAY ORDER NO. S/125-126 OF 2006-ST

SERVICE TAX STAY NOS. 759-760 OF 2006

IN SERVICE TAX APPEAL NOS. 83-84 OF 2006

April 26, 2006

Section 67, read with section 68 of the Finance Act, 1994 - Valuation of taxable service - Assessee was providing security personal to its clients and was recovering salaries, in addition to service charges for providing security personnel - It paid service tax on 15 per cent of gross amount received as service charges - Revenue demanded service tax on total amount realized by assessee inclusive of salary and other benefits provided to security personnel - However, in case of New Industrial Security Force v. CCE [2006] 3 STT 277 (New Delhi - Cestat), it was held that prima-facie, salary payable to security personnel would stand on a different footing than services provided by security agency to procure security personnel for client - Whether in view of above requirement of pre-deposit of demand was to be waived and stay in respect of impugned order was to be granted - Held, yes [Para 4]

FACTS

The assessee was providing the security personnel to its various clients and was recovering the salaries, in addition to the service charges, for providing the security personnel. The revenue demanded service tax from the assessee on the total amount realized by the assessee, inclusive of the salary and other benefits to be provided to security personnel in addition to the service charges.

On application:-

HELD

In case of New Industrial Security Force v. CCE [2006] 3 STT 277 (New Delhi - Cestat) it was held that prima-facie, salary payable to the security personnel would stand on a different footing than the services provided by the security agency to procure the security personnel for the client. [Para 3]

Service tax is to be charged on the gross amount recovered for providing the service as service charges and not on the salaries and other benefits payable to the employees and recovered from the client by the security agency. In this view of the matter, no reason was found to ask the assessee to pre-deposit any amount as it had already paid service tax on the 15 per cent service charges it had recovered from the client. Therefore, the pre-deposit was to be waived and stay of the impugned order was to be granted. [Para 4]