M/S. A N Rao Enterprises vs Commissioner Of Central Excise, ...
- CitationAppeal No. 01/2014
Ratio decidendi
The rule this decision rests on
Amounts paid by a service provider towards provident fund and employees' state insurance contributions, which the provider is statutorily bound to deposit as employer, cannot be treated as reimbursements by the service receiver so as to fall outside the taxable value of the service. Where a service provider incurs expenditure on items such as safety equipment, uniforms or food for workers at the specific requirement of the service receiver, and recovers such expenditure from the receiver at actual cost, the provider acts as a pure agent in incurring it, and the amounts so reimbursed are to be excluded from the taxable value and deducted from the demand.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
[Arising out of Order-in-Appeal No. 01/2014 (H-III) ST dated 11/03/2014 passed by Commissioner Of Central Excise, Customs and Service Tax (Appeal I & III), HYDERABAD.]
For approval and signature:
HON'BLE SHRI JUSTICE G. RAGHURAM, PRESIDENT HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER
1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes
M/s. A N Rao Enterprises House No. A-1, 14-94, NFCNagar, Ghatkesar RR DIST 501 301 AP Appellant(s)
Versus
Commissioner of Central Excise, Customs And Service Tax Hyderabad-III OPP LB STADIUM ROAD, BASHEERBAGH, HYDERABAD 500 004. ANDHRA PRADESH
Respondent(s)
Appearance:
Mr. Harshit Kumar Nahar, CA DJHS & ASSOCIATES CHARTERED ACCOUNTANT 'GREEN APPLE', NO.16, 1ST FLOOR, MURPHY ROAD, ULSOOR BANGALORE - 560008 KARNATAKA For the Appellant
Mr. S. Teli, DC (AR)
For the Respondent
Date of Hearing: 06/02/2015
Date of Decision: 06/02/2015
CORAM:
HON'BLE SHRI JUSTICE G. RAGHURAM, PRESIDENT HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER
Final Order No. 20307 / 2015
Per : B.S.V. MURTHY,
Appellant is a proprietary firm engaged in providing manpower supply services. As a result of investigation, proceedings were initiated by issue of show-cause notice on 6.11.2012 resulting in impugned order confirming demand for differential service tax of Rs.31,45,668/- during the period from 2007-08 to 2011-2012. Penalties have also been imposed under various sections of Finance Act, 1994.
2. The learned CA on behalf of the appellant submits that demand has arisen as a result of finding of the Commissioner(A) that appellant should have included the amounts paid by them towards PF and ESI and reimbursed by the service receivers. Further, he also submits that appellants had provided safety equipments such as helmets, gloves to the workers and this amount was also received by them on actual cost basis from their service receivers. On occasions, appellants had to provide food to the workers and the actual cost of which was reimbursed and Uniform cost also has to be held to be includable.
3. The learned AR submits that PF and ESI are includable and relies upon the decision in the case of Ideal Security vs. CCE, Allahabad as reported in 2011-TIOL-883-CESTAT-DEL.
4. We have considered the submissions. As regards PF and ESI, even if it is a reimbursement, as an employer the appellant is bound to deposit this amount and therefore it cannot be considered as a reimbursement by the service receiver and we also find that the Tribunal has already taken a view as submitted by the learned AR. Therefore on this issue appellant does not have a case. However, as regards helmets, gloves, uniform, food, etc., we find that these are requirements of specific industry or the receiver and such expenses can be said to have been incurred on behalf of the principal as submitted by the learned CA. When expenditure is incurred on behalf of the service receiver, the appellant can be said to have acted as a pure agent. Therefore, the amounts reimbursed on these account may have to be reduced from the demand. Under these circumstances, we find that instead of deciding the stay application, since we have already decided both the issues before us, it would be appropriate to pass a final order at this stage itself. Accordingly, we set aside the impugned order and remand the matter to the original adjudicating authority to undertake fresh adjudication keeping the observations made hereinabove in view. Needless to say before the issues are adjudicated afresh, appellant shall be given reasonable opportunity to present their appeal.
(Operative portion of the was Order pronounced in open court)
JUSTICE G. RAGHURAM PRESIDENT
B.S.V. MURTHY TECHNICAL MEMBER
RV 2
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