The Hyderabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed service tax demand and held that the rent-free accommodation provided to CISF personnel is not additional consideration.
In respect of the rent free accommodation provided to the Appellant’s personnel by RINL, the HRA @20% of the Basic Pay and Grade Pay was taken as the value of the rent saved by the Appellant. This was taken as part of the total consideration in terms of Section 67 of the Finance Act and Service Tax of Rs.70,76,574/- was demanded. After due process, the Adjudicating Authority confirmed the demands. Being aggrieved, the Appellant is before the Tribunal.
The counsel for the appellant in respect of the rent free accommodation given to CISF personnel, relied on the case of CST vs Bhayana Builders and submitted that even in many of the above cited case laws of CISF, wherein reimbursement was the primary issue, the rent free accommodation/HRA was also dealt with and the Tribunals have been consistently holding that they are not exigible to Service Tax.
The counsel for the revenue submitted the Adjudicating Authority was correct in confirming the demands on merits and that Appellant never disclosed that they were getting reimbursements on several counts and also were getting additional consideration by way of rent free accommodation from RINL. Thus, there is a case of suppression on the part of the Appellant. Accordingly, he justifies the invocation of extended period. Finally, he submits that the Appeal is required to be dismissed.
Quashing the service tax demand a Two-Member Bench comprising R Muralidhar, Judicial Member and AK Jyotishi, Technical Member observed that “It can be observed from the above decisions that in the case of other units of the same Appellant, identical issues were raised by the Appellant and in all these cases it has been held that the reimbursement expenses are not to be added to the gross value for arriving at the Service Tax payable. The Rule 5 of the Service Tax (Determination of Value) Rules has been held as ultra vires by the High Court and Hon’ble Supreme Court. Similarly, in these cases, it has also been held that the rent free accommodation provided to the CISF personnel cannot be taken as additional consideration. Therefore, we find that cited case laws are squarely applicable to the facts of the present case.”
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