2009 (1) TMI 204 - AT - Service Tax

Manpower recruitment or supply agency service collection of registration fees of Rs. 100 and refundable deposit of Rs. 30000 from the applicant - There was only dispute with regard to the valuation. The appellants furnished certain details with regard to the refund of amounts to candidates. The said information was not accepted by the Commissioner (Appeals) in the absence of proper evidence. However, before the Tribunal, the learned Advocate argued that a question of law is also involved in this appeal. According to him, the appellants conduct interview of candidate on behalf of certain foreign organizations or companies. Therefore, the appellant companies are actually their clients and not the candidates who have paid registration fee of Rs.100/- (Rupees One hundred only) and refundable deposit of Rs. 300,000/- (Rupees Three lakhs only) matter remanded to determine certain issues as per order.

Summary

Issues involved:
1. Liability to pay service tax on the registration fee and refundable deposit received from candidates.
2. Dispute regarding valuation of the service for the purpose of service tax.
3. Whether the appellant companies are liable to pay service tax as Manpower Recruitment Agency.
4. Introduction of new legal ground challenging the impugned order.
5. Cooperation of the appellants with the lower authorities in the proceedings.

Analysis:

1. The appellant undertook the activity of interviewing and selecting candidates for jobs on behalf of foreign companies, collecting a registration fee and a refundable deposit. The Revenue claimed the appellant was liable to pay service tax under the category of Manpower Recruitment Agency. The appellant did not dispute the leviability of the activity to service tax but disputed the valuation. The Commissioner (Appeals) rejected the appellant's information on refunds due to lack of evidence. However, the appellant argued before the Tribunal that a legal question was involved, stating that the appellant companies were clients of the foreign organizations, not the candidates paying the fees.

2. The learned SDR objected to the appellant's submission, contending that the liability to service tax was not challenged earlier and new grounds could not be introduced. He also criticized the appellant for lack of cooperation with the lower authorities. The Tribunal noted a legal question regarding the levy of service tax and the fundamental point under challenge. Consequently, the Tribunal set aside the impugned order and remanded the matter to the Original Authority for a De novo consideration on whether the appellant was required to pay service tax on the deposits received from candidates.

3. The Tribunal directed the appellants to cooperate fully with the Adjudicating Authority in the proceedings. The De novo order was instructed to be issued within three months from the date of the Tribunal's order. The stay and appeal were disposed of, emphasizing the need for a thorough examination of the legal question raised by the appellants regarding the liability to pay service tax as a Manpower Recruitment Agency. The matter was to be re-evaluated by the Original Authority to determine the applicability of service tax on the amounts received from candidates.