2018 (11) TMI 981 - AT - Service Tax

Manpower Recruitment or Supply Agency Service - appellant had received payments during the period after 01.05.2006 towards participation fees as well as recruitment fees for the placement services, but did not pay service tax thereon - Held that - The CBEC has clarified vide Circular dated 21.08.2003 that levy of service tax on a particular service comes into force on a given date and no tax will be chargeable if the service is rendered before that date. Accordingly, if the service is rendered prior to 01.05.2006, no liability of service tax will fall on the Institute, even if payment is received after this date since it has been clarified by the CBEC in Circular dated 01.11.2006 that IIM cannot be considered as Commercial Concern. For the amounts received after 01.05.2006, which are corelatable to the services rendered by the Institute prior to such date no service tax liability can be fastened on the appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Liability for service tax under "Manpower Recruitment or Supply Agency Service" for payments received after 01.05.2006 but related to services rendered before that date.

Analysis:
The appeal was filed against an Order-in-Original dated 07.11.2007, where the appellant, an Institute, conducted Placement Recruitment Programmes. The Institute collected fees from companies for participation and recruitment of candidates. The issue arose when the department noticed that the appellant received payments post-01.05.2006 for services rendered before that date but did not pay service tax. The department contended that the appellant was liable for service tax under "Manpower Recruitment or Supply Agency Service" for such payments. The appellant argued that the liability for service tax should be determined based on when the services were rendered, as per CBEC Circular No.62/11/2003-ST. They also cited a Tribunal decision in favor of another Institute. The Tribunal noted that the dispute was about the Institute's liability for service tax under the amended definition of the service post-01.05.2006. It was clarified that if services were rendered before 01.05.2006, no service tax liability would arise, even if payments were received after that date. The Tribunal, relying on the CBEC Circular and the Bangalore Tribunal decision, held that no service tax liability could be imposed on the appellant for payments received post-01.05.2006 related to services rendered before that date. Consequently, the impugned order was set aside, and the appeal was allowed.

This judgment clarifies the liability for service tax under "Manpower Recruitment or Supply Agency Service" concerning payments received after 01.05.2006 but linked to services rendered before that date. The Tribunal emphasized that the timing of service provision determines the service tax liability, as per CBEC Circular No.62/11/2003-ST. It was established that if services were rendered before 01.05.2006, no service tax liability would arise, even for payments received post that date. The decision was supported by a previous Tribunal ruling and highlighted the importance of the service provision date in determining service tax liability.