2017 (11) TMI 1726 - AT - Service Tax

Manpower Recruitment Agency service - demand of 75% of Service Tax - N/N. 30/2012-ST dt 20.6.2012 - in one case demand was paid on being pointed out - in another case, appellant did not pay service tax as supplier paid 100% of tax, and appellant claims that no demand is sustainable against the appellant - Held that - As per N/N. 30/2012-ST dt 20.6.2012 there is no dispute that the appellant was required to pay 75% of the Service Tax on Manpower Recruitment Agency Service availed. For the initial period, on pointing out by the Revenue the appellant immediately paid Service Tax. In that circumstance, the said demand is not sustainable against the appellant. For the another invoice on which the appellant did not pay Service Tax but the service provider paid the 100% of Service Tax. In that circumstance, the appellant is not required to pay 75% of the Service Tax in terms of Notification No. 30/2012-ST dt 20.6.2012 - in such case, if the payment has made by the appellant, the same shall become double taxation against the appellant which is not permissible in the law. Demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against demand of Service Tax for 'Manpower Recruitment Agency service' under Notification No. 30/2012-ST.

Analysis:
The appellant contested the demand of Service Tax on 'Manpower Recruitment Service' as per Notification No. 30/2012-ST. The appellant availed the service in July 2012, where they were required to pay 75% of the Service Tax, with the supplier responsible for the remaining 25%. One instance occurred where the appellant failed to pay the tax, but the supplier paid 100% instead of the required 25%. The Revenue demanded Service Tax at 75% rate on the value of services received, leading to the appeal. The appellant argued that since the supplier paid 100% tax, no additional demand should be made from them to avoid double taxation, citing a relevant Tribunal decision.

The appellant's counsel highlighted that as the supplier had already paid the full Service Tax, no further demand should be imposed on the appellant to prevent double taxation. This argument was supported by a precedent set in a previous Tribunal case involving Omeri India Pvt Ltd. On the contrary, the Authorized Representative for the Revenue upheld the findings of the initial order confirming the demand.

After hearing both parties and reviewing the submissions, the Tribunal noted that the appellant promptly paid the Service Tax upon Revenue's notification for the initial period. In the case where the supplier paid 100% tax, the appellant was not obligated to pay the 75% tax as per the Notification. Imposing such a demand would result in double taxation, which is impermissible by law. Consequently, the Tribunal found the demand unsustainable against the appellant and set aside the impugned order, allowing the appeal.

In conclusion, the Tribunal ruled in favor of the appellant, holding that the demand for Service Tax under Notification No. 30/2012-ST was not sustainable due to the supplier's full payment and the risk of double taxation. The decision emphasized the legal prohibition against imposing double taxation and upheld the appellant's argument based on the specific circumstances of the case.