2020 (4) TMI 416 - AT - Service Tax

Manpower recruitment or supply agency service - provider of service by an employee to the employer - whether beyond the scope of taxation? - HELD THAT - Learned Authorised Representative who submits that the decision relied upon by Learned Counsel affirms the tax liability and, therefore, it would appear that the appeal itself should be dismissed. The grounds now intended to be incorporated in the appeal arises from the provisions of the law and from settled judicial disputes. Accordingly, the miscellaneous application for additional ground is allowed. Matter to be decided afresh by original authority after taking note of the submissions of the noticee into account - Appeal disposed off by way of remand.

Summary

Issues:
Confirmation of demand, imposition of penalty under section 78 of Finance Act, 1994, applicability of 'negative list' era, tax liability of a provider of 'manpower recruitment or supply agency service', interpretation of the definition of 'service' in section 65B(44)(b), consideration of functions as statutory responsibilities, admissibility of additional grounds in appeal, necessity of original authority's finding on additional issues, setting aside impugned order for fresh decision.

Confirmation of Demand and Penalty Imposition:
The judgment concerns the confirmation of a demand of ?6,48,30,607/- for a specific period, along with interest and a penalty under section 78 of the Finance Act, 1994. The appellant argued that the demand pertained to a period before the introduction of the 'negative list' and disputed the adjudicating authority's classification of them as a provider of 'manpower recruitment or supply agency service'. The appellant contended that during the 'negative list' era, the definition of 'service' in section 65B(44)(b) would render the allegation unsustainable as services provided by an employee to an employer would fall outside the scope of taxation. Additionally, the appellant cited previous decisions stating that their functions were not services but statutory responsibilities aimed at promoting the welfare of unskilled workers. The Tribunal acknowledged the contentions raised by the appellant and allowed the incorporation of additional grounds in the appeal, which were derived from settled judicial disputes and provisions of the law.

Admissibility of Additional Grounds and Fresh Decision:
The Tribunal emphasized that the additional grounds introduced issues on which the original authority did not have the opportunity to express findings, which is crucial for the proper disposal of the appeal. Consequently, the Tribunal set aside the impugned order and directed the matter to be reconsidered by the original authority, taking into account the submissions made by the appellant. This decision was made to ensure a fair and comprehensive assessment of the case, allowing for a fresh determination based on all relevant factors presented during the proceedings.

Conclusion:
In conclusion, the Tribunal disposed of the appeal by setting aside the original order and instructing a reevaluation by the original authority. By considering the arguments regarding the 'negative list' era, tax liability, and statutory responsibilities, the Tribunal aimed to ensure a thorough examination of the case and a just decision based on all pertinent aspects. The judgment highlighted the importance of providing the original authority with the opportunity to address additional issues raised during the appeal process, ultimately emphasizing the need for a comprehensive and fair adjudication of the matter.