2015 (11) TMI 978 - AT - Service Tax

Demand of service tax - Manpower Recruitment Service or Supply Agency Service - deputation of employees to other company - Held that - There is no element of profit or finance benefit. The subsidiary companies cannot be said to be their clients. Deputation of the employees was only for and in the interest of the company. There was no relation of agency and client. It was pointed out that the employee deputed did not exclusively work under the direction of supervision or control of subsidiary company. All throughout he would be under the continuous control and direction of the company. - Decision in the case of Krohne Marshall Pvt. Ltd. 2015 (10) TMI 2459 - CESTAT MUMBAI followed. Impugned orders before us are unsustainable and liable to be set aside - Decided in favour of assessee.

Summary

Issues involved:
- Whether the demand of service tax under the category of Manpower Recruitment Service or Supply Agency Service is justified.

Detailed analysis:
The judgment by the Appellate Tribunal CESTAT Mumbai pertains to three appeals directed against specific orders dated August 30, 2011, and May 23, 2012. The central issue in this case is the demand of service tax under the category of Manpower Recruitment Service or Supply Agency Service for the period between June 2005 to March 2010. The lower authorities had imposed the service tax liability, interest, and penalties on the appellants for charging their group companies a consideration for deputing employees to work. The contention was that this service fell under the mentioned category. However, the appellant argued that a similar issue had been decided in their favor by the Hon'ble High Court of Gujarat and by the Tribunal in another case involving their group companies.

The Tribunal considered the submissions made by both sides and reviewed the records. It was noted that the issue revolved around the demand of service tax under the category of Manpower Recruitment Service or Supply Agency Service. The Tribunal found that a similar issue had been decided in favor of the appellant in a previous case involving the same group companies. The Tribunal referenced a judgment by the Hon'ble High Court of Gujarat in a related matter, which concluded that deputing employees to various group companies did not amount to manpower recruitment and supply agency services. The Tribunal emphasized that the appellant was not a commercial concern engaged in providing such services to a client, as required by the definition of Manpower Supply Recruitment Agency.

In light of the settled issue and the precedents cited, the Tribunal held that the impugned orders were unsustainable and set them aside. The appeals were allowed with consequential relief. The Tribunal's decision was based on the established legal principles and interpretations of the relevant laws and definitions. The judgment provided a detailed analysis of the facts, legal arguments, and precedents that led to the conclusion in favor of the appellant.