2015 (10) TMI 1734 - AT - Service Tax

Manpower recruitment agency and supply services - services provided to overseas client. - export of services - Held that - the employees were recruited by the appellant for clients abroad for working, salaries are paid by the clients of appellant and the services of the appellant was engaged by the foreign clients for identifying the potential employees who can work abroad. It is to be seen that though the services of the appellant were for identifying, short listing and confirming the employment of the personnel in India, it was for working abroad and not in India. This would, in our considered opinion, would fall under the category of export of services. - Decision made in the case of SGS India 2014 (5) TMI 105 - BOMBAY HIGH COURT followed - Decided in favor of assessee. Business Auxiliary services - Held That - services are collateral to the services rendered by the appellant for recruitment of the personnel for the clients situated abroad - qualifies for export of services. Further, demand of small amount of ₹ 20,132/- is confirmed with interest but penalties set aside Decided partly in favour of the Assessee.

Summary

Issues:
Dispute over service tax liability for recruitment services rendered abroad. Misdeclaration of value and imposition of penalties under sections 76, 77, and 78 of the Finance Act, 1994.

Analysis:
The appeal challenged an Order-in-Original passed by the Commissioner of Central Excise regarding the undervaluation of amounts received by the appellant for recruitment services provided to overseas clients. The revenue alleged that the appellant had misdeclared the value, leading to the invocation of an extended period for assessment. The adjudicating authority confirmed the demand for service tax, interest, and penalties. The appellant contended that the services provided fell under the category of manpower recruitment agency services and were essentially export of services. The appellant argued that the services were for recruiting employees to work abroad, making it an export of services. The departmental representative, however, argued that the services were consumed in India as the clients visited India for interviews and selection procedures. The Tribunal found that the services provided by the appellant were for identifying employees to work abroad, constituting export of services. Citing a similar case, the Tribunal ruled in favor of the appellant, emphasizing that the services were consumed abroad. The judgment of the Hon'ble High Court of Bombay in a related case supported the appellant's position.

The Tribunal also addressed the service tax liability under "business auxiliary services," concluding that the services were collateral to recruitment services for overseas clients, aligning with the judgments of other cases in favor of the appellant. Regarding a minor service tax liability of Rs. 20,132, the Tribunal confirmed the demand with interest but set aside the penalties. The appeal was allowed, and the impugned order was deemed unsustainable and set aside. The Tribunal did not delve into other submissions due to the disposal of the appeal on merits.