2019 (11) TMI 1261 - AT - Service Tax

Reverse charge mechanism - demand of service tax - man power recruitment or supply agency services - commercial training or coaching services - demands have been raised under reverse charge mechanism under Section 66A of the Finance Act, 1994 on the ground that they had availed these services from their overseas partners and paid for the same - HELD THAT - The appeal by way of remand to the adjudicating authority for the sole purpose of verification of the documents and determining if the personnel deployed and the appellant had an employee-employer relationship. Needless to say, principles of natural justice must be followed and adequate opportunity must be afforded to the appellant to present their documents. Appeal allowed by way of remand.

Summary

Issues:
1. Service tax demand on man power recruitment or supply agency services and commercial training or coaching services under reverse charge mechanism.
2. Interpretation of whether deployment of personnel from parent company to Indian subsidiaries constitutes manpower recruitment service.
3. Dispute regarding liability for service tax under Section 66A of the Finance Act, 1994.
4. Verification of documents to establish employee-employer relationship between the appellant and the deployed personnel.

Analysis:
1. The appellant challenged the service tax demand on man power recruitment or supply agency services and commercial training or coaching services under reverse charge mechanism. The appellant contended that the demand for commercial training and coaching services had been paid, and the remaining dispute pertained to the man power recruitment services. The appellant argued that the deployment of personnel from their parent company should not be considered as manpower supply service, citing precedents like Volkswagen India Pvt Ltd. and Nissin Break India Pvt Ltd. The appellant's counsel highlighted that a similar issue had been resolved in their favor in a subsequent period by the Learned Commissioner.

2. The main issue revolved around the interpretation of whether the deployment of personnel from the parent company to the Indian subsidiaries constituted manpower recruitment service. The appellant relied on various tribunal and court decisions to support their argument that such deployment should not be categorized as manpower recruitment service. The appellant emphasized that the issue had already been settled by the Hon'ble Apex Court, and the matter had reached finality at the highest court of the land.

3. The dispute regarding the liability for service tax under Section 66A of the Finance Act, 1994 stemmed from the allegation that the appellant was the service recipient of the manpower supply services rendered by their parent company. The appellant sought to overturn the impugned order and argued that the demand under man power recruitment services should be dropped based on legal precedents and the subsequent decision in their own case by the Learned Commissioner.

4. The final issue pertained to the verification of documents to establish an employee-employer relationship between the appellant and the personnel deployed. The Departmental Representative requested remand to the Commissioner for verification based on documents such as Form-16, Form-24Q, Provident Fund Contributions, and FRRO registration. The appellant's counsel expressed no objection to the remand for verification, emphasizing adherence to principles of natural justice and providing adequate opportunity for the appellant to present their documents.

In conclusion, the Appellate Tribunal allowed the appeal by way of remand to the adjudicating authority for the sole purpose of verifying the documents and determining the existence of an employee-employer relationship between the appellant and the deployed personnel. The principles of natural justice were emphasized, and both parties agreed to the remand for verification.