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2013 (12) TMI 617 - AT - Service TaxWaiver of pre deposit - Manpower Recruitment or Supply Agency Service - Held that - The appellant viz. M/s. BPL Ltd. has formed a joint- venture with M/s. Sanyo Electric Company Ltd., Japan and this joint- venture is called M/s. Sanyo BPL Pvt. Ltd. Under this arrangement, M/s. BPL Ltd. would ask their employees to resign, who would then join M/s. Sanyo BPL Pvt. Ltd. As some time was taken for the joint- venture to launch its business activities, M/s. BPL Ltd. continued to retain the employees and pay their salaries and wages though the employees were sitting idle. This idle period is from June to December, 2005. In order to compensate the loss arising out of this, the joint-venture paid Rs. 5 crores to M/s. BPL Ltd. (appellant), which was shown as expenditure in the accounts of the joint-venture - prima facie there is no ingredients of Manpower Recruitment or Supply Agency Service in the aforesaid transactions. Hence, there will be waiver of pre-deposit and stay of recovery in respect of the adjudged dues - Stay granted.
Issues:
Waiver and stay in respect of adjudged dues including Service tax under 'Manpower Recruitment or Supply Agency Service' for the period from June to December, 2005. Analysis: The case involved an application seeking waiver and stay concerning the adjudged dues, notably an amount demanded as Service tax under the category of 'Manpower Recruitment or Supply Agency Service' for the period spanning from June to December, 2005. The appellant, M/s. BPL Ltd., had entered into a joint-venture with M/s. Sanyo Electric Company Ltd., Japan, forming M/s. Sanyo BPL Pvt. Ltd. During the period in question, there was an 'idle period' from June to December, 2005, where M/s. BPL Ltd. continued to pay the salaries and wages of its employees who were not actively engaged due to delays in launching the joint-venture's business activities. To compensate for this loss, the joint-venture paid Rs. 5 crores to M/s. BPL Ltd., which was recorded as 'expenditure' in the joint-venture's accounts. Subsequently, the Department considered M/s. BPL Ltd. as a 'manpower recruitment and supply agent' and viewed the compensation amount as consideration for 'Manpower Recruitment or Supply Agency Service', leading to the impugned demand. Upon hearing the arguments presented by the learned counsel for the appellant and the Additional Commissioner (AR), the Tribunal analyzed the transactions. After a thorough review, the Tribunal did not find any elements indicative of 'Manpower Recruitment or Supply Agency Service' in the said dealings. Consequently, the Tribunal concluded that there was a lack of evidence to support the categorization of the appellant as a 'manpower recruitment and supply agent' in this context. Therefore, the Tribunal decided in favor of the appellant by granting a waiver of pre-deposit and stay of recovery concerning the adjudged dues, based on the absence of the necessary components to establish liability under the 'Manpower Recruitment or Supply Agency Service' category. This judgment highlights the importance of a detailed examination of the factual and legal aspects of a case to determine the applicability of specific tax categories and liabilities. The decision underscores the significance of substantiating claims with concrete evidence and meeting the essential criteria for imposing tax liabilities under relevant statutes.
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