2017 (3) TMI 1290 - AT - Service Tax

Levy of tax - lease agreement - lease of services falling under man power recruitment or supply agency services - time limitation - Held that - the fact of leasing of the factory was very much in the knowledge of the Revenue and in fact based upon the same earlier show cause notices were issued to them raising demands though under different categories and different situation. However, the said fact establishes that there was no suppression or malafide on the part of the appellant with any malafide intention. As such, the longer period of limitation is not available to the Revenue - entire demand is barred by limitation - appeal allowed by way of remand.

Summary

Issues:
Leviability of service tax on providing skilled workers to lessee; Contesting demand of service tax; Reimbursement of expenses; Limitation issue; Upholding of original adjudicating authority's order by Commissioner (A); Applicability of longer period of limitation for recovery of service tax.

Analysis:
The judgment deals with the issue of leviability of service tax on providing skilled workers to a lessee, contested by the appellant who engaged in the manufacture of flexible laminates. The dispute arose when the authorities initiated proceedings against the appellant for providing services falling under the category of man power recruitment or supply agency services. The demand of service tax was raised for the period March 2005-October 2006, totaling &8377; 13,99,069. The appellant's contention that they were not engaged in providing manpower recruitments and that the expenses were reimbursable was rejected by the lower authorities, leading to the confirmation of the demand along with penalties.

The appellant challenged the order of the original adjudicating authority, which was upheld by the Commissioner (A), resulting in the present appeal. The tribunal considered the submissions from both sides, particularly focusing on the argument that expenses of staff were reimbursable and not consideration for manpower supply services. However, the tribunal decided to base its judgment on the point of limitation, noting that the appellant was earlier issued a show cause notice in 2003, dropped in 2004, and subsequently faced another notice in 2007 and 2008. The tribunal observed that there was no suppression or malafide intention on the part of the appellant, leading to the conclusion that the longer period of limitation was not available to the Revenue.

Ultimately, the tribunal held that the entire demand was barred by limitation, setting it aside and allowing the appeal with consequential relief to the appellant. The judgment was pronounced in open court on 16.02.2017.