2013 (11) TMI 799 - AT - Service Tax

Stay application - Classification of service - Manpower supply service or IT service - Held that - what was provided was actually manpower supply service , even though the assessee claimed it under information technology service - No doubt there were clauses relating to deliverables and quality of work in the contracts but these by themselves do not indicate that the appellants are providing information technology software services to TCS and Infosys - Any person or organization obtaining skilled personnel had to ensure that such men deliver work of standard quality - No one would employ a person who was not skilled enough and no one would pay for shoddy work even if done by a skilled man - Following decision in the case of M/s. Sasken Communications Technologies Ltd. 2013 (9) TMI 431 - CESTAT BANGALORE - Assessee is directed to make a pre deposit - Prima facie case not in favour of assessee - Stay granted partly.

Summary

Issues:
1. Stay against recovery of service tax demand from June 2005 to August 2006, including interest and penalty.
2. Applicability of service tax on IT services provided by the appellant.
3. Requirement of pre-deposit amount pending appeal based on Tribunal decisions.

Analysis:
The appellant sought a stay against the recovery of over Rs.73 lakhs, comprising service tax demand from June 2005 to August 2006, along with interest and penalty. The appellant's representative argued that they offer IT services and receive payments either as fixed fees or on a time and material basis. They contended that for payments received as fixed fees, no demand was raised, but demands were made for similar services where charges were based on time and material. The appellant claimed that they fall under the category of IT services, not manpower supply services, and cited Tribunal decisions supporting their position. They highlighted that since 2008, they have been paying service tax under the IT service category. On the other hand, the Departmental Representative referred to a Tribunal decision involving M/s. Sasken Communications Technologies Ltd., where a significant pre-deposit was required.

The Tribunal, considering the circumstances and the precedent set in the M/s. Sasken Communications Technologies Ltd. case, ordered the appellant to make a pre-deposit of Rs.10,00,000 within six weeks, with a compliance report due on 27.8.2013. Upon this deposit, the requirement for further pre-deposit of the remaining dues was waived, and a stay against recovery was granted during the pendency of the appeal. The decision was pronounced and dictated in open court by the presiding judge.