2017 (3) TMI 786 - AT - Service Tax

Manpower recruitment or supply agency service - whether the appellants have rendered the services of manpower recruitment or supply agency service or otherwise? - Held that - there is no restriction as to the specific number of employees to be brought for such purposes; and work force employed by the appellant was on the role of the appellant only and is supervised by the appellant - this contract cannot be considered as a contract for supply of manpower to KLL - the services would not fall under the category of manpower recruitment or supply agency services - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Service tax liability for services provided to various companies, including manpower recruitment or supply agency services to specific entities.

Analysis:
The judgment involves two appeals against orders-in-original dated 20.02.2012 and 27.02.2012, addressing service tax liability issues. The appellants collected service tax from clients but failed to deposit it in some cases. The services provided included manpower supply to different companies. Show-cause notices were contested, resulting in demands for service tax, interest, and penalties. The main contention was whether the services constituted manpower recruitment or supply agency services.

The appellants acknowledged the service tax liability for some services but contested it for others. They argued that the agreement with one company was for lumpsum work, not manpower recruitment. The Department argued that the appellants provided services as jobworkers, thus liable for service tax. The issue was whether the appellants provided manpower recruitment services or performed jobwork.

After considering submissions, the Tribunal found that services to three companies indeed constituted manpower recruitment, upholding the tax liability, interest, and penalties. However, regarding services to another company, the Tribunal disagreed with the adjudicating authority's classification. The agreement terms indicated a lumpsum work arrangement, not manpower supply. Citing precedent cases, the Tribunal ruled in favor of the appellants, setting aside the demand for service tax on those services.

In conclusion, the Tribunal upheld the service tax liability for some services while rejecting it for others based on the nature of the agreements and services provided. The judgment clarified the distinction between manpower recruitment services and lumpsum work arrangements, providing relief to the appellants in one instance. The appeals were disposed of accordingly, with the decision pronounced on 08.03.2017.