2024 (4) TMI 682 - AT - Service Tax

Time limitation - Levy of service tax - Manpower Supply Service - secondment of employees by the Appellant to its associated Foreign Counterpart at Germany on reverse charge mechanism - suppression of facts or not - HELD THAT - In the present case it could be noticed that show-cause notice was issued on 16.10.2015 up to the end of financial year 2013-2014 during the relevant period and in view of clear provision contained in Section 73(1) read with 73(6), the normal period for making demand through show-cause notice was 18 months from the relevant date and if any fraud, collusion, wilful misstatement, suppression of facts, contravention of any of the provisions of this Chapter or the Rules made thereunder with intent to evade payment of Service Tax is noticed in view of proviso to Section 73(1), Central Excise Officer can served notice for demand that could be extended up to 5 years. This being the statutory provision, the notice of demand being signed on 16.10.2015 and dispatched thereafter cannot be considered to have been sent within 18 months of the end of financial years, up to which demand is made i.e. up to 31st March 2014 - the show-cause notice is not issued in conformity to the law and, therefore, it was required to be quashed before initiation of adjudication proceeding. Appellant having filed its return for the said period on 25.10.2013, in view of clear provision contained in Section 73(6)(i)(a) wherein it has been mentioned that for the purpose of determination of relevant date , periodical return filed on the date showing particulars of Service Tax paid during the period to which return relates would be taken for the purpose of calculation of period of limitation of 18 months, which would end on 25.01.2015 the entire demand is barred by limitation. The contention made by the Appellant that this appeal is hopelessly barred by the period of limitation, agreed upon, as the entire proceeding is carried out in gross violation of the position of law and deviation in any form from the statutory provision is impermissible. The order passed by the Principal Commissioner of Central Excise Service Tax, Pune-I is hereby set aside - Appeal allowed.

Summary

Issues involved: Confirmation of Service Tax demand on secondment of employees to foreign counterpart under "Manpower Supply Service" and the validity of the show-cause notice in relation to the period of limitation.

Issue 1: Confirmation of Service Tax demand on secondment of employees

The Appellant challenged the confirmation of a Service Tax demand of Rs. 7,71,24,785/- along with interest and equal penalty on secondment of employees to its associated Foreign Counterpart in Germany under the heading "Manpower Supply Service."

The Appellant, engaged in providing various taxable services, had employees deputed to its foreign counterpart in Germany. The demand was raised based on the assertion that this arrangement amounted to manpower supply service on secondment. The show-cause notice issued for the financial years 2010-11 to 2013-14 alleged suppression of facts regarding non-payment of Service Tax.

After hearing submissions from both sides, it was acknowledged that the secondment of employees by the overseas entity for the completion of the Assessee's job constituted manpower supply. The demand was deemed sustainable, but the invocation of the extended period was found impermissible. The show-cause notice issued on 16.10.2015, beyond the normal 18-month period for making demands, was considered not in conformity with the law, leading to the requirement for its quashing before adjudication.

Issue 2: Validity of the show-cause notice in relation to the period of limitation

The Appellant contended that the entire demand was barred by limitation as the proceedings deviated from the statutory provision. The last date of payment was noted to be on 28.05.2013, with the return filed for the period ending on 25.10.2013. Citing Section 73(6)(i)(a), which determines the relevant date for the limitation period, it was argued that the demand was time-barred, ending on 25.01.2015.

The Tribunal agreed with the Appellant's submission, ruling that the appeal was hopelessly barred by the period of limitation. Any deviation from the statutory provisions was deemed impermissible, leading to the setting aside of the order confirming the Service Tax demand.

Conclusion:
The Appellant's appeal was allowed, and the order confirming the Service Tax demand was set aside due to non-conformity with the law and being time-barred.