Decided on December 28,2012

Doon Security Services Appellant
Customs, Excise and Service Tax Appellate Tribunal and Another Respondents


- (1.) The appeal by the appellant has been dismissed by the Tribunal in view of failure on the part of the appellant to deposit the amount of service tax levied on it. The contention of the appellant was that the gross amount charged, as provided in clause (d) of section 67 of the Finance Act, 1994, will not include the amount paid by the appellant to the personnel hired by it for providing security services to BSNL, inasmuch as, under the tender, it was stipulated by BSNL that such persons would be paid by the appellant the minimum wages, as fixed by the Government. It was contended by the appellant that the gross amount charged by the appellant, in the instant case, could be only that much of amount, which would remain in the hands of the appellant after paying the minimum wages to the security personnel, as it was required to pay in terms of the provisions of the tender documents. We think that, in interpreting a taxing statute, one must only take into account the words used by the statute. The words, in the instant case, are "the gross amount charged by such agency from the client for services rendered in connection with the security . . .". Therefore, whatever gross amount was charged by the appellant from its client for the services rendered in connection with security, was liable to be taxed. There is no dispute that the personnel hired by the appellant were provided as security personnel by the appellant to its client and the gross amount charged by the appellant from its client included the amount paid to such hired personnel as well as the amount over and above the same paid by its client to the appellant. The section, referred to above, did not provide for any deduction from the gross amount. However, the concept of service is value addition. Therefore, the service must be such, which adds value to what is received by the client of such service provider. A tax or an impost required for the purpose of providing service cannot be treated as a value addition, inasmuch as the same is a requirement and, unless the said requirement is not fulfilled, further steps for adding value will not arise. In the instant case, though it was provided that the minimum wage, as fixed by the Government, is required to be paid to the hired personnel, but there was neither an impost nor a direction, that the same must be paid. There is no dispute that less than that could not be paid, but more than that could be paid. The minimum wage has been fixed taking into account that, that much at least is required for sustenance. In the circumstances, the conclusion would be that the liability to pay service tax was to be determined on the gross amount charged by the appellant from its client for services rendered in connection with security and, that having been done, there is no scope of interference. In the event, the tax determined is paid within a period of one month from today, no penalty shall be levied, inasmuch as the appellant was genuinely confused having regard to imposition of obligation upon it to pay the minimum wages to the personnel hired by it. The appeal, accordingly, stands disposed of.;

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