Judgement-Reimbursement of Service Tax paid by service provider even if not mentioned in Service Agreement
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In the instant case, where a security agency, provided services to BSNL. As per the service agreement, there was no mention of service tax payment. Later, service tax authorities demanded service tax from the security agency and the agency deposited the service tax so demanded. However, when the security agency subsequently asked BSNL for the reimbursement of the same, it was denied on the ground that there was no mention of service tax payment in the agreement.
The Hon’ble Court ruled in favour of the security agency (the petitioner) that under the statute, the service tax has been imposed upon the person to whom service is being provided, and the service provider is merely a collecting agency.
HIGH COURT OF ALLAHABAD
Court No. - 33
Case :- WRIT TAX No.- 870 of 2007
Petitioner:- M/S Bhagwati Security Services (Regd.)
Respondent:- Union Of India & Others
Petitioner Counsel :- Virendra Kumar,Virendra Singh
Respondent Counsel :- A.S.G.I.,A. Nigam,S.C.,S.Chopra.,Subodh Kumar,Suneel Rai,SunilRai
Hon'ble Sushil Harkauli,J.
Hon'ble Naheed Ara Moonis,J.
Heard learned counsel for the petitioner and the learned counsel appearing on behalf of the respondent No.2, and seen the record.
There is an agreement between the petitioner and the respondent no.2 i.e. B.S.N.L., under which the petitioner was required to provide security services to the respondent no.2. under agreement between the two parties. The agreement contained the terms of payment.
Subsequently service tax was demanded from the petitioner which has been deposited by the petitioner. The petitioner applied before the respondent no.2 for reimbursement of the service tax, which request has been denied by the respondent no.2 by the impugned order.
Only reason given for denying the reimbursement of the service tax is that the same was not contemplated in the service agreement. Having gone through the agreement and the provisions of the relevant statute, we find that service tax is statutory liability. It is a tax which is required to be collected by the service provider from the person to whom service is provided, and thereafter to be deposited with government treasury within the prescribed time.
Thus essentially the statute is being imposing the tax upon the person to whom service is being provided, and the service provider is merely a collecting agency.
In that view of the matter, the writ petition is allowed. The respondent no.2 is directed to make reimbursement of service tax to the petitioner without further delay.
Order Date :-16.1.2013
Naim
