2013 (11) TMI 41 - AT - Service Tax

Valuation - inclusion of reimbursement of expenses - Manpower Recruitment of Supply Agency - inclusion of Lease value which includes Lease rent for Land, plant & machinery and other infrastructure. - Penalty u/s 78 - Held that - Rule 5(1) of service tax (Determination of value) Rule 2006 has been held ultra vires Section 67 of the Finance Act, 1994 and this Rule can not be relied on by the adjudicating authority. Similarly tax is demanded on Manpower Recruitment or Supply Agency service value of which is required to be segregated from total lease amount. Without expressing any view on merit of the case we remand the matter back to commissioner of Central Excise for fresh adjudication in light of decision of Delhi High Court in case of Intercontinental Consultants & Technocrats Pvt. Ltd. (2012 (12) TMI 150 - DELHI HIGH COURT) after affording a opportunity of hearing of the appellants - matter remanded back.

Summary

Issues:
Whether the appellants are a Manpower Recruitment or Supply Agency providing taxable service as per Section 65(105)(K) of the Finance Act.

Analysis:
The case involved two appeals filed by M/s Maltex Malsters Ltd. against the Order in Original passed by the Commissioner of Central Excise Chandigarh - II. The officers of Central Excise initiated an enquiry against the appellants, alleging that they entered into an agreement with another company for a certain consideration. The Department viewed the appellants as engaged in providing Manpower Recruitment or Supply service under the Finance Act. Consequently, Show Cause Notices were issued demanding service tax amounts and penalties. The Commissioner confirmed the service tax, interest, and penalties. The appellants challenged this decision in the present appeals.

During the hearing, the main issue was whether the appellants qualified as a Manpower Recruitment or Supply Agency providing taxable service under the Finance Act. The appellants' advocate argued that the determination of the taxable value relied on certain rules that were deemed ultra vires by the Delhi High Court in a related case. It was pointed out that the value of the Manpower Recruitment or Supply Service was not separately shown in the Show Cause Notice. The Revenue representative highlighted that the service tax was demanded on the entire lease value, including various components, without specific segregation for the Manpower Recruitment or Supply Service.

After considering the arguments from both sides, the Tribunal acknowledged the ruling of the Delhi High Court regarding the invalidity of Rule 5(1) of the Service Tax Rules. The Tribunal concluded that the tax demanded on the Manpower Recruitment or Supply Agency service needed to be segregated from the total lease amount. Without delving into the merits of the case, the matter was remanded back to the Commissioner for fresh adjudication in line with the Delhi High Court's decision. The appellants were granted the opportunity to present additional material or evidence in their support during the fresh adjudication process. Ultimately, the appeals were disposed of by way of remand, providing a chance for further review and consideration.