2011 (8) TMI 419 - AT - Service Tax

Providing labour on demand - Manpower Recruitment Agency - amendment w.e.f. 16.6.2005. - Held that - The manpower supplied to M/s BHEL were never taken on the establishment or pay roll of M/s BHEL and in such circumstances it cannot be said that they were recruiting manpower for M/s BHEL. decided in favour of Assessee.

Summary

Issues:
Service tax liability on supply of manpower to M/s BHEL by different appellants for various periods.

Analysis:
1. The case involved six appeals concerning the supply of manpower by different appellants to M/s BHEL. The Revenue contended that the appellants should have paid Service Tax on the amounts received for supplying manpower. The Revenue argued that the appellants should have paid Service Tax under the category of 'Manpower Recruitment Agency' for the period before the relevant entry was amended. The appellants, however, maintained that the workers supplied to M/s BHEL remained on their payroll and were not recruited by M/s BHEL directly. They relied on tribunal decisions and a circular to support their case.

2. The Revenue pointed out that the appellants initially charged and paid Service Tax to the department for the services provided to M/s BHEL but later stopped without informing the department. The Revenue argued that the workers supplied were under the supervision of M/s BHEL and were recruited for BHEL's work, making it fall under the 'Manpower Recruitment Agency' category for Service Tax purposes. Additionally, the Revenue highlighted the rate charged per manday by the appellants.

3. The tribunal considered the arguments presented by both sides. It was noted that the Revenue failed to refute the appellants' contentions. The tribunal found that the issue had been previously addressed in tribunal decisions cited by the appellants. Consequently, the tribunal agreed with the appellants' position based on the precedent set by previous tribunal decisions and ruled in favor of the appellants, allowing three of the appeals.

This judgment clarifies the Service Tax liability concerning the supply of manpower and emphasizes the importance of the legal interpretation of relevant provisions and precedents in determining tax obligations in such cases.