2024 (8) TMI 852 - AT - Service Tax

Classification of service - manpower supply service or support services of business treating it as Data Entry Services? - invocation of extended period of limitation. Classification of service - HELD THAT - It is not in dispute that the appellants believed that the said service falls under the category of manpower supply services. It is also not in dispute that M/s. BSNL also believe that the said service is manpower supply services. The Chartered Accountant has confirmed that M/s.BSNL has paid the service tax throughout for this transaction. In these circumstances even if the said service is treated as a service other than manpower supply service the demand cannot be confirmed in view of the decision in the case of MANDEV TUBES VERSUS COMMISSIONER OF CENTRAL EXCISE VAPI 2009 (5) TMI 102 - CESTAT AHMEDABAD . Ld. Authorised Representative has relied on the decision of Hon ble Apex Court in the case of Om Sai Fabricators 2023 (7) TMI 1064 - SC ORDER . It is seen that the said case relates to the liability of service tax payment of sub-contractor vis- -vis the payment of service tax by the main contractor. It is seen that the facts in the said case was different and the situation is not necessarily revenue neutral like in the instant case. Therefore the said case is not applicable to the instant situation. Invocation of extended period of limitation - HELD THAT - From the facts of the case it is apparent that the appellant bonafidely believe that the said services fall under the category of manpower supply services and the service tax was being regularly paid by the service recipient. Therefore invocation of extended period of limitation was also not justified. Appeal allowed.

Summary

Issues:
Appeal against demand of service tax and penalties invoking extended period of limitation.

Analysis:
The appellant provided services to BSNL, claiming it to be manpower supply service, while BSNL paid service tax on reverse charge basis. Revenue contended the service was not manpower supply but support services, issuing a Show Cause Notice for service tax from the appellant under extended limitation period. The lower authorities upheld the demand, leading to the current appeal.

The appellant argued the services indeed fell under manpower supply, supported by a Chartered Accountant Certificate showing BSNL paid service tax as manpower supply service. Citing precedents like Umasons Auto Compo Pvt. Ltd. and others, the appellant asserted that when one party pays the entire service tax, no additional demand can be made to avoid double taxation. They also referenced M/s. Uniworth Textiles Ltd. vs. CCE to oppose the invocation of extended limitation period due to their genuine belief in the service category.

The Authorized Representative, however, relied on the impugned order and the case of Om Sai Fabricators, arguing that even if one party pays the tax, it can still be demanded from another. After considering the arguments, the Member (Technical) noted the mutual belief of both parties that the service was manpower supply, with BSNL consistently paying service tax as such. Referencing the same precedents as the appellant, the Member concluded that even if the service was categorized differently, the demand could not be upheld.

Regarding the case of Om Sai Fabricators, the Member distinguished it as pertaining to subcontractor liability, not a revenue-neutral scenario like the present case. Ultimately, the Member found the appellant's genuine belief in the service category, coupled with regular tax payments by BSNL, justified the appeal's allowance, rejecting the invocation of extended limitation period.

In summary, the appeal was allowed based on the appellant's bona fide belief in the service category, consistent tax payments by BSNL, and the inapplicability of extended limitation period, as per the cited precedents and analysis.