2014 (12) TMI 288 - AT - Service Tax

Waiver of pre deposit - Manpower recruitment or supply agency services - secondment of employees - Held that - he salary fixed for the employee is to be paid in both in India as well as in home country of the employee. What has to be paid in the home country of the employee is paid by the appellant to their principal who takes the responsibility of making such payments to the employee in his home country. There is no finding forthcoming anywhere from the records or from the findings that any fee or extra amount has been paid to the principal who has seconded the employee at all. Decision of AAR IT in the case of Target Corporation India (P.) Ltd. 2012 (8) TMI 466 - AUTHORITY FOR ADVANCE RULINGS distinguished. - It is quite clear that the decision of AAR IT is not applicable and the facts in this case are similar to the case of M/s. Volkswagen India (Pvt.) Ltd. 2013 (11) TMI 298 - CESTAT MUMBAI . In both of which favourable view was taken in respect of the assessee, we consider that appellant has made out a prima facie case in respect of these amounts. Appellant has made out a prima facie case for complete waiver of pre-deposit and accordingly, the requirement of pre-deposit of balance dues is waived and stay against recovery is granted for 180 days - Stay granted.

Summary

Issues:
1. Liability to pay service tax for 'manpower recruitment or supply agency services'
2. Liability to pay service tax for 'management, maintenance or repair service'
3. Liability to pay service tax for 'commercial coaching or training service'

Analysis:

Issue 1 - Liability for 'manpower recruitment or supply agency services':
The appellants were alleged to have received such services and were held liable for service tax. The counsel argued citing a precedent involving M/s. Volkswagen India (Pvt.) Ltd., where it was held that the liability of service tax is not attracted to the receiver. Reference was also made to the case of Deloitte Support Services India Pvt. Ltd., emphasizing the absence of an employer-employee relationship between the receiver and the manpower supplier. The Authority for Advance Ruling, Income Tax (AAR, IT) was also referred to, highlighting the significance of the right to terminate employment in determining the existence of an employer-employee relationship. Ultimately, the Tribunal found the facts in the present case to be similar to the favorable decisions in the M/s. Volkswagen India (Pvt.) Ltd. and M/s. Deloitte Support Services cases, leading to a prima facie case in favor of the appellants.

Issue 2 - Liability for 'management, maintenance or repair service':
The appellants were found liable for service tax under this category. However, the counsel contended that the appellants had already made payments for the entire amount payable, which was not duly noted by the original authority. It was argued that the demand was based on expenses in foreign currency, and the appellants had segregated the amounts where service tax was payable and were paying regularly. The Tribunal accepted the claim that the tax due had been paid by the appellants, leading to a waiver of the pre-deposit requirement and a stay against recovery for 180 days.

Issue 3 - Liability for 'commercial coaching or training service':
The appellants were held liable for service tax under this head. However, the counsel's argument regarding the payment of the entire amount payable and the segregation of amounts where service tax was due was accepted by the Tribunal. Consequently, the requirement of pre-deposit of balance dues was waived, and a stay against recovery was granted for 180 days.

In conclusion, the Tribunal found in favor of the appellants on all three issues, granting a waiver of pre-deposit and a stay against recovery for 180 days based on the prima facie case made out by the appellants.