2015 (8) TMI 593 - AT - Service Tax

Supply of manpower - factory along with the machinery of the appellant was to be given under leave and licence to one company - Whether the amounts received by the appellant towards salary and other government dues are liable to service tax or otherwise under the category of manpower recruitment and supply agency service - Held that - amounts received by the appellant in this case as actual salaries cannot be considered as an amount received for rendering of manpower recruitment and supply agency services. As the ratio which has been laid down by the Honourable High Court squarely covers the issue, the decision of the Tribunal in the case of Daurala Organics (2009 (3) TMI 99 - CESTAT NEW DELHI) will not carry the case of the revenue any further. - Relying on authoritative judicial pronouncements we hold that the impugned order is unsustainable and liable to be set aside - Decided in favour of assessee.

Summary

Issues:
1. Whether the amounts received by the appellant towards salary and other government dues are liable to service tax under the category of manpower recruitment and supply agency service.

Analysis:
The appeal challenged an order-in-original due to the appellant's failure to discharge service tax liability on amounts received for employees' salaries from another company. The appellant argued that the arrangement was as per the direction of the High Court and cited relevant judgments. The Departmental Representative contended that the appellant was supplying manpower to the other company. The Tribunal analyzed the agreement terms and the nature of the arrangement. It was found that the employees were on the appellant's muster roll, and the salaries were reimbursed by the other company. The Tribunal disagreed with the adjudicating authority's view, stating that the appellant did not function as a commercial concern for manpower supply. The Tribunal referenced judgments to support its decision, ultimately setting aside the impugned order and allowing the appeal.

Judgment Comparison:
In a separate judgment, the Tribunal discussed a case where the respondent deputed employees to group companies for specific work, maintaining control and supervision. The Revenue contended that the respondent fell under the definition of a Manpower Supply Recruitment Agency. However, the Tribunal disagreed, noting that the respondent did not provide recruitment or supply of manpower services commercially. The Tribunal emphasized that the respondent deputed staff for cost reduction, and there was no agency-client relationship. The Tribunal dismissed the Tax Appeal, highlighting that the respondent did not meet the criteria of a manpower recruitment agency as per the relevant definition, despite the broad scope of the definition.

This comprehensive analysis covers the issues involved in the legal judgment, detailing the arguments presented by both sides, the Tribunal's assessment, and the application of relevant legal principles from cited judgments.