The Ahmedabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has observed that NTPC is not liable to pay service tax on vehicles for transportation, telephone facilities.
The bench of Ramesh Nair (Judicial Member) and Raju (Technical Member) observed that the appellant/assessee are not liable to pay service tax on the value of accommodation, vehicles for transportation, telephone facilities, etc. and it is found that as regard the issue penalty, the demand on merits is not sustainable, there is no question of imposition of penalty under Section 76. When the demand is not maintainable, there is no question of interest on the differential demand of service tax.Â
Table of Contents
Background
The issue involved in the present case is that Whether the security services received by NTPC Ltd. from CISF has been correctly valued under Section 67 of the Finance Act, 1994 for the purpose of discharging service tax liability on reverse charge basis.
The assessee/appellant, NTPC Ltd. are holding Service Tax registration for payment of Service Tax under various categories of services such as rent a cab service, consulting engineer service, manpower recruitment and supply agency service business support service, etc.
The Appellant are availing security services from Central industrial security force on the strength of MOU (memorandum of understanding) signed between the appellant and the CISF. The appellant are availing security services from Central industrial security force on the strength of MOU (memorandum of understanding) signed between the appellant and the CISF.
The appellants are paying Service Tax on the security services availed from CISF under reverse charge mechanism basis as provided under provisions of Rule 2 (1) (d) (i) (E) of the Service Tax Rules of 1994 read with Notification No. 30/2012 -ST dated 20.06.2012.
It is a matter of record that as per the MOU entered between the appellant and the CISF the scope of service provided by CISF to the appellant is restricted only to supply of security personnel which is utilized by the appellant for the purpose of security of their premises.
The appellants are making available accommodation, transport, etc facilities to CISF personnel deployed by CISF to the appellant during the period they remain deployed with the appellant.
An audit was carried out at the premises of the Appellant during 17.03.2015 till 30.05.2015 for the period April 2013 to September 2014. On the basis of the said audit, Final Audit Report 21.08.2015 was issued raising objections against the Appellant for the non-payment of service tax. The Appellants vide letter dated 31.10.2015 submitted a reply to the audit objection.
The audit culminated into issuance of Show Cause Notice in which the Department proposed to demand Service Tax.
The case of the department in the show cause notice is that the value of free housing/accommodation facility provided by the appellant to the CISF personnel should be treated as additional consideration flowing to CISF and the value of such facilities need to be included in the service value for the purpose of payment of Service tax.
The Appellant filed a detailed Reply to the above Show Cause Notice denying all the allegations levelled against them by the Department.
A statement in lieu of Show Cause Notice was issued to the Appellant on the same grounds under Section 73(1A) of the Finance Act, 1994 demanding an amount of Rs. 5,58,727/- for the period October 2014 to September 2015 along with interest and imposition of penalty. The Appellant submitted their Reply dated 17.05.2016 to the above Statement.
The Commissioner (Appeals) has observed that the Appellants have not paid service tax on the total amount charged by CISF for providing security service along with additional consideration by way of cost of additional facilities in accordance with the MOU entered between the Appellants and CISF. Therefore, the allowance in terms of residential accommodation need to be converted into money value and liable to service tax.
Arguments
The appellant contended that the penalty was imposed penalty of Rs. 50,000/- under Section 76 of the Finance Act, 1994 for SCN dated 08.03.2016 which has been upheld by the impugned OIA. When the demand on merits is not sustainable, there is no question of imposition of penalty under Section 76.
The appellant contended that there was a bona fide belief on part of the appellants that no service tax is payable on the value of free facilities which was provided by the Appellants. Therefore, there was reasonable cause for failure, if any, on part of the Appellants not to pay service tax. Hence, in terms of section 80, penalty cannot be imposed under Section 78.
Conclusion – Service Tax On Vehicles
The tribunal held that when the demand is not maintainable, there is no question of interest on the differential demand of service tax. Hence, the interest demand on the differential service tax liability is not maintainable.
FAQs
Is NTPC Liable To Pay Service Tax On Vehicles?
No. NTPC Not Liable To Pay Service Tax On Vehicles.
Case Details
Case Title: NTPC LTD v/s Commissioner of C.E-Bharuch
Case No.: Service Tax Appeal No. 10449 of 2018 – DB
Date: 21.10.2024
Counsel For Appellant: Amber Kumrawat
Counsel For Respondent: Anand Kumar
