2008 (9) TMI 158 - AT - Service Tax

Supply of Manpower appellant, a proprietorship is resisting demand on the ground that they were not a commercial concern to be taxed on supply of manpower - definition of the service indicates that it should be rendered by a commercial concern, for the purpose of tax liability - whenever service tax payable on the gross amount collected from clients is reimbursed by them Nevertheless appellant has reserved his right to challenge the levy on a few grounds stay partly granted

Summary

Issues:
1. Demand of service tax on "Supply of Manpower"
2. Applicability of service tax on a proprietorship
3. Challenge to the levy on grounds of not being a "commercial concern"
4. Requirement of pre-deposit of additional amount

Analysis:
1. The judgment addresses the demand of service tax on "Supply of Manpower" by an appellant who had paid a portion of the amount but contested the tax liability. The appellant, a proprietorship, argued they were not a "commercial concern" subject to tax. However, the definition of the service introduced from a specific date indicated tax liability for services rendered by commercial concerns. The appellant had paid tax on amounts reimbursed by clients, as evidenced by documents, with the hope of more reimbursements to meet tax obligations. The tribunal noted the absence of a prima facie case against the tax demand and directed the appellant to pre-deposit an additional amount within a specified timeframe.

2. The judgment delves into the applicability of service tax on a proprietorship engaged in the "Supply of Manpower" services. Despite the appellant's resistance based on not being a "commercial concern," the tribunal considered the payment of tax on reimbursements made by clients. The appellant's financial hardships were not pleaded, and the tribunal, adopting a lenient approach, directed the pre-deposit of a specific sum to ensure compliance with tax obligations.

3. The challenge to the levy on the grounds of not being a "commercial concern" was raised by the appellant. The tribunal observed the appellant's payments of tax on amounts reimbursed by clients, indicating a willingness to meet tax liabilities. The appellant's right to challenge the levy on certain grounds was acknowledged, but the tribunal did not find a strong case against the demand for service tax. The directive for a pre-deposit of an additional amount was issued to ensure compliance with tax obligations within a specified timeframe.

4. The judgment concludes by specifying the requirement for the appellant to pre-deposit a particular amount within a set period, emphasizing the importance of compliance with tax obligations. The tribunal highlighted the need for the appellant to report compliance by a specified date, indicating a strict adherence to the directive for the pre-deposit of the additional sum to address the demand for service tax on "Supply of Manpower" services.