2018 (3) TMI 1242 - AT - Service Tax

Manpower Recruitment and Supply Agency Services - the parent company, M/s SIC, supplied manpower from abroad to the assessee-Appellants in India - Held that - an identical issue has come up for consideration before the Tribunal in the case of Airbus Group India Pvt. Ltd. vs CST, Delhi 2016 (7) TMI 1209 - CESTAT NEW DELHI , where it was held that the reimbursement amount paid by the appellant to the foreign companies is relating to the cost of salaries and wages of the employees working under the appellant - appeal allowed - decided in favor of assessee-Appellants.

Summary

Issues:
Service tax liability on reverse charge basis for manpower recruitment and supply agency services.

Analysis:
The appeal was filed against the Order-in-Original passed by the Commissioner (Appeals), Central Excise, Jaipur, for the period 2008-09 to December 2011. The case involved the assessee-Appellants, engaged in manufacturing Printing Inks, entering into an agreement with their parent company in Japan for technical support. The parent company deputed technical experts to work with the assessee-Appellants in India, and TDS was deducted on their salaries. The issue was whether the service provided by the parent company fell under the category of "Manpower Recruitment and Supply Agency Services" as per Section 65(68) of the Finance Act, 1994. The Service Tax was demanded, and penalties were imposed based on this interpretation.

During the hearing, it was argued that the employees were under the control and supervision of the assessee-Appellants, and all statutory obligations as an employer were fulfilled by them. The Tribunal referred to a previous case involving a similar issue and concluded that the foreign entities were not engaged in the business of manpower supply agency services. The employees were working as the assessee-Appellants' employees with an employer-employee relationship, and there was no supply of manpower service for tax liability to arise. The Tribunal also highlighted previous judgments emphasizing the absence of a profit or financial benefit in cases of deputation of employees between companies.

Based on the above analysis and following the precedent set in the previous case, the Tribunal found no merit in the impugned order. Consequently, the appeal filed by the assessee-Appellants was allowed, and the impugned order was set aside.