2014 (12) TMI 961 - AT - Service Tax

Waiver of pre deposit - secondment of employees - Manpower Recruitment or Supply Agency Service - Business Auxiliary Service - Held that - Manpower Recruitment or Supply Agency service allegedly received by the appellant, that issue also stands concluded by the judgment of the Gujarat High Court in C.S.T. vs. Arvind Mills Ltd. reported in 2014 (4) TMI 132 - GUJARAT HIGH COURT whereby the High Court confirmed the decision of the Ahmedabad Bench of this Tribunal in Arvind Mills Ltd. vs. C.S.T., Ahmedabad reported in 2013 (10) TMI 821 - CESTAT AHMEDABAD . There are other decisions of this Tribunal in Paramount mount Communication Ltd. vs. C.C.E., Jaipur - 2013 (3) TMI 134 - CESTAT NEW DELHI ; Volkswagen India Pvt. Ltd. vs. C.C.E., Pune I reported in 2013 (11) TMI 298 - CESTAT MUMBAI and of the Principal Bench in BMW India Pvt. Ltd. vs. C.S.T. ,Delhi reported in 2013 (10) TMI 585 - CESTAT NEW DELHI which enunciates the same principle of no liability to tax on reimbursement of the expenses and salaries of employees seconded by the principal employer to a subsidiary employer in India, for effective execution of the principal employer s business. In so far as Business Auxiliary Service is concerned, the appellant claims that it amounts to export of taxable service and is entitled to immunity to service tax under provisions of the Export of Service Rules, 2005.This plea stands concluded by the Larger Bench decision of this Tribunal in Paul Merchants Ltd. vs. C.C.E., Chandigarh reported in 2012 (12) TMI 424 - CESTAT, DELHI (LB) as well as the decision in Simpra Agencies and Simpra Agencies Pvt. Ltd. reported in 2014 (6) TMI 354 - CESTAT NEW DELHI . We grant waiver of pre-deposit in full and stay all further proceedings for realization of the adjudicated liability, pending disposal of the appeal - Stay granted.

Summary

Issues:
1. Tax liability under various categories of taxable services.
2. Applicability of Export of Service Rules, 2005 to Business Auxiliary Service.
3. Liability under Manpower Recruitment or Supply Agency service.
4. Interpretation of Section 73(3) of the Finance Act, 1994.
5. Pre-deposit waiver and stay of further proceedings.

Analysis:

1. The appellant contested the tax liability for providing/receiving taxable services like Business Auxiliary Service, Commercial Training or Coaching, Manpower Recruitment or Supply, Technical Consultancy, and Consulting Engineering services. The period in question ranged from April 2006 to September 2008. The appellant argued against tax liability under Business Auxiliary Service, citing export of service under the Export of Service Rules, 2005. However, this claim was rejected. The appellant voluntarily remitted tax liabilities for Commercial Training or Coaching and Technical Consultancy services before any show cause notice was issued.

2. Regarding Manpower Recruitment or Supply Agency service, the appellant contended that the secondment of employees from the principal entity for conducting business in India did not fall under this category. Despite this argument, the Adjudication authority disagreed. Notably, the proposal for service tax demand under Consulting Engineering service was dropped by the authority and was not part of the appeal.

3. The appellant claimed that Business Auxiliary Service qualified as an export of taxable service and thus should be exempt from service tax under the Export of Service Rules, 2005. This plea was supported by previous tribunal decisions in Paul Merchants Ltd. vs. C.C.E., Chandigarh and Simpra Agencies Pvt. Ltd. However, the Adjudication authority did not accept this argument.

4. In the case of Manpower Recruitment or Supply Agency service, the issue was settled by the judgment of the Gujarat High Court in C.S.T. vs. Arvind Mills Ltd. The High Court upheld the decision of the Ahmedabad Bench of the Tribunal, confirming that reimbursement of expenses and salaries of seconded employees did not attract service tax. Several other tribunal decisions supported this principle, including Paramount Communication Ltd. vs. C.C.E., Jaipur and Volkswagen India Pvt. Ltd. vs. C.C.E., Pune I.

5. Considering the circumstances and the legal precedents, the Tribunal granted a waiver of pre-deposit in full and stayed further proceedings for the realization of the adjudicated liability pending the appeal's disposal. The stay application was consequently disposed of, providing relief to the appellant during the ongoing legal process.