2011 (5) TMI 444 - AT - Service Tax

Waiver of pre-deposit - Demands have been confirmed under the category of Manpower Recruitment or Supply Agency - Revenue submits that the Board s Circular F. No. B1/4/2006-TRU dated 19.4.2006 has categorically clarified that if the service provider acts as an pure agent he can claim the expenditure incurred by him as reimbursable expenditure - It is the submission that the concept of a pure agent would not include the contractor for supply of labour and in this case appellant is only a contractor as can be seen from the agreements - Prima facie the appellant cannot be construed as a pure agent - This aspect of pure agent needs to be gone into details which can be done only at the time of final disposal of the appeal - Find that the appellant has not made out prima facie case for complete waiver of pre-deposit of the amounts involved.

Issues: Stay petitions for waiver of pre-deposit of service tax and penalty amounts for two different periods under the category of "Manpower Recruitment or Supply Agency".

Analysis:
1. The stay petitions were filed seeking a waiver of pre-deposit of service tax and penalty amounts for two different periods related to the category of "Manpower Recruitment or Supply Agency". The demands were confirmed for the periods from November 2005 to March 2008 and from April 2008 to March 2009. The appellant, represented by a Chartered Accountant, argued that they were acting as a 'pure agent' in the contract for the supply of laborers, receiving only a service charge on the basic wages paid to the laborers.

2. The Departmental Representative referred to a Board's Circular stating that a service provider acting as a 'pure agent' could claim the expenditure incurred by him as reimbursable expenditure. However, it was contended that the concept of a 'pure agent' does not include a contractor for the supply of labor. The adjudicating authority examined the contract and found that it was for the supply of manpower, not as a 'pure agent'. The terms and conditions of the agreement indicated that the appellant could not be considered a 'pure agent'. The issue of the appellant's status as a 'pure agent' required detailed examination at the time of final disposal of the appeal.

3. After considering the submissions from both sides, the Tribunal found that the appellant had not established a prima facie case for a complete waiver of pre-deposit of the amounts involved. Consequently, the Tribunal directed the appellant to pre-deposit a specified amount within a given period and report compliance. Upon compliance, the condition of pre-deposit of the remaining amounts was waived, and the recovery was stayed until the disposal of the appeals. This decision was pronounced and dictated in court for implementation.

This detailed analysis of the judgment highlights the key arguments presented by both parties, the Tribunal's evaluation of the appellant's claim as a 'pure agent,' and the final decision regarding the pre-deposit of amounts involved in the case of "Manpower Recruitment or Supply Agency."

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