2013 (11) TMI 96 - AT - Service Tax

Nature of services - Manpower Supply Agency Service or employer employee relationship to constitute salary - Waiver of pre deposit - Held that - agreement is very clear which talks about the supply of labourer on contract basis from independent contractor. The said contract also talks about skilled, semi-skilled and unskilled workers. On perusal of the terms of the contract, we find that the contract is very clear as to discharge of service tax liability, professional tax liability etc. is on the contractor. We are unable to understand as to why the appellant had not billed the service recipient the service tax liability of such amount. We are of the view that appellant has not made out a prima-facie case for complete waiver of pre-deposit of the amounts involved. - stay granted partly

Summary

Issues:
Waiver of pre-deposit of service tax liability, interest, and penalties for the period 2007-08 to 2010-11 in a Manpower Supply Agency Service case.

Analysis:
The appellant sought a waiver of pre-deposit of Rs. 71,52,916/- confirmed as service tax, interest, and penalties under the Finance Act, 1994. The tax liability arose from services rendered as a Manpower Supply Agency for the mentioned period. The appellant's Chartered Accountant argued that the appellant only received amounts as salary from service recipients and reimbursed the salary expenses. It was claimed that the appellant had no other income besides service charges, which were used to discharge the service tax liability. The departmental representative supported the adjudicating authority's findings.

Upon reviewing the agreement between the appellant and the service recipient, the Tribunal found it clear regarding the supply of labor on a contract basis by an independent contractor. The terms of the contract specified the responsibility for service tax liability, professional tax liability, etc., to be on the contractor. The Tribunal questioned why the appellant had not billed the service tax liability to the recipient and concluded that the appellant failed to establish a prima facie case for a complete waiver of pre-deposit. Consequently, the Tribunal ordered the appellant to deposit the entire confirmed service tax liability within twelve weeks and report compliance by a specified date. The application for waiver of pre-deposit of the remaining amounts was allowed subject to compliance, with recovery stayed until the appeal's disposal.

This judgment highlights the importance of clear contractual terms in determining tax liabilities and the necessity for proper billing practices to discharge tax obligations. The Tribunal's decision underscores the need for appellants to demonstrate a strong case for complete waiver of pre-deposit amounts, emphasizing compliance with tax liabilities pending appeal resolution.