2013 (9) TMI 711 - AT - Service Tax

Manpower supply or recruitment agency services - payment to employees through third party main contention of the appellant was personnel employed by them remained their employees during the period of the agreements hence there is no supply of manpower Held that - The appellant has a strong case in their favour - Merely because the payment has been made through the German entity, the activity does not come under the purview of Manpower Supply or Recruitment Agency Service - Relying on the judgement of ITC LTd. Vs. Commissioner of Central Excise, New Delhi (2012 (7) TMI 744 - CESTAT, NEW DELHI). Pre deposit of duty court waived duty demanded till final disposal stay application allowed stay granted.

Summary

Issues:
1. Whether the transaction involving the employment of foreign nationals by a company comes under the purview of 'Manpower Supply or Recruitment Agency services' for the purpose of Service Tax liability.
2. Whether the appellant is entitled to an interim stay against the demands raised by the department.

Issue 1:
The case involved appeals and stay applications against Orders-in-Original passed by the Commissioner of Central Excise, Pune-I. The appellant, M/s Volkswagen India (Pvt.) Ltd., Pune, employed personnel from their group company in Germany, with 25% of the salary paid in India and the remaining 75% paid by the German entity. The department alleged that this transaction fell under 'Manpower Supply or Recruitment Agency services,' issuing a show-cause notice for Service Tax on the remitted amount. The appellant contended that the personnel remained their employees, and the payment method did not constitute manpower supply. Citing precedents, the appellant sought interim stay, which was supported by the Commissioner (AR) acknowledging previous Tribunal decisions granting interim stays.

Issue 2:
After considering submissions and precedents, the Tribunal found in favor of the appellant, granting an unconditional waiver from pre-deposit of the dues and staying the recovery during the appeal's pendency. The Tribunal also directed the appeals to be listed for final hearing due to the substantial revenue involved. The decision was based on the appellant's strong case supported by previous Tribunal decisions granting interim stays in similar circumstances.

This judgment highlights the interpretation of 'Manpower Supply or Recruitment Agency services' concerning the employment of foreign nationals and the applicability of Service Tax liability. It underscores the importance of legal precedents in determining the outcome of appeals and the Tribunal's discretion in granting interim stays based on the merits of the case presented.