Service Tax by CISF – Reverse Payment – Request not Accepted
The CISF is hiring – not security personnel; they will have to soon hire tax consultants. The Service Tax Department was always sure that Government bodies like CISF are not exempted from Service Tax and the mighty CISF caved in and made a meek request to shift the liability to pay service tax from CISF to the recipient of service. May be the CISF feels it is not as good in dealing with the assaults from the taxmen as it is in dealing with those toughies out to destroy industrial peace and security.
Revenue officers have a habit of lecturing – you ask them a question, they will tell you a story – you will never get a straight reply. You ask them how to fit in your marketing model within the excise law, they will advise on how to do business – they can advise on anything under the Sun except the tax laws which they are meant to administer. And this lecture system is prevalent right till the top including the FM – sometime back at the peak of the oil crisis, our FM had lectured to Ministers of Oil Countries as to how they should do business.
Coming back to the CISF's request – it had come from the Home Ministry – Revenue has clarified:-
Government departments and organisations under Central and State Governments including CISF are deducting TDS on payments made to suppliers of services and on wages and salaries paid to staff and deposit the same with the Income Tax department along with details.
And so what is your problem in following a similar system for Service Tax?
Revenue has also educated the Home Ministry on essential features of Service Tax:-
As a general principle, service tax is required to be paid by the service provider, for the amount received during the month, on the 5th day of the following month.
Service tax return is required to be filed once in six months.
For the purpose of payment of service tax, service tax registration can be taken either at a single location or at more than one locations depending upon the accounting system and the convenience of the tax payer.
Service tax paid is available as input credit to the consumers of service and thus the tax paid is only a pass-through.
Pray, who asked you all this? Are you going to make the recipient pay instead of the CISF? That was the question. That was also answered,
It is, therefore, appropriate for CISF, being the service provider, to deposit the service tax on taxable services such as security service, consulting service provided instead of asking the recipient to deposit the service tax.
The Revenue therefore advised the Home Ministry to advise the CISF to take appropriate steps to discharge the service tax liability.
CISF should have approached the All India Motor Transport Congress to effectively submit its representation to the Revenue Department to make the recipient liable to pay the tax.
CISF is an armed force of the Government of India and the entire fee (including Service Tax) collected by it is credited into the Consolidated fund of India – if at all Service tax is to be paid by CISF, instead of hundreds of registrations and returns, can't the central organisation be asked to pay one service tax amount at the end of the year on its entire income – one cheque and no return, will do.
Whose money are we wasting in these payments, returns, litigation and clarifications?
And soon we will have SCNs flying around with CISF being accused of suppression, fraud and intent to evade payment of tax and so some overactive Commissioner may even impose Crores of Rupees as penalty on CISF or even some IPS officers manning it.
The CISF Act is an Act of Parliament to provide for the constitution and regulation of an armed force of the Union for the better protection and security of Industrial Undertakings owned by the Central Government and certain other Industrial Undertaking, employees of all such Industrial Undertakings......
Can you say it is a Security Agency? The CISF actually deputes its staff to work under the Managing Director of a Central Industrial Undertaking;
it does not really provide security service. And given a chance, no undertaking would hire the CISF; it is mandatory for them to do so.
Can the State Police providing Security on payment be also called a security agency liable to pay Service Tax?
CBEC F. No. 345/1/2007 – TRU dated 19.8.2008 + Also See: CISF, Whether Liable To Pay Service Tax?