2024 (11) TMI 725 - AT - Service Tax

Non discharge of service tax liability on Manpower Recruitment Agency Services, Business Auxiliary Service Maintenance and Repair Service - whether the appellant had rendered Manpower Recruitment and Supply Agency Services Business Auxiliary Service during the period in question i.e. from 16.06.2005 to 31.03.2006 and 09.07.2004 to 31.03.2006 respectively? HELD THAT - We find that the Commissioner(Appeals) has mechanically endorsed the order of the adjudicating authority and not discussed as to how the appellants are liable to discharge service tax under the category of Manpower Recruitment and Supply Agency Services Business Auxiliary Service as per the definitions provided under the Finance Act, 1994. The order appears to be cryptic and unreasoned one, which cannot be sustained in view of the principle laid down in Shukla Brothers 2010 (4) TMI 139 - SUPREME COURT - Therefore, the impugned order is set aside and the appeal is remanded to the learned Commissioner(Appeals) to pass a well-reasoned order.

Summary

Issues:
1. Whether the appellant rendered Manpower Recruitment Agency Services, Business Auxiliary Service & Maintenance and Repair Service without discharging service tax.
2. Whether the demand of service tax under Business Auxiliary Service is justified.
3. Whether the order passed by the Commissioner of Central Excise (Appeals-II) is sustainable.

Analysis:

1. The appellant was issued a show-cause notice for allegedly not discharging service tax amounting to Rs.12,93,582/- for services rendered in relation to supply of computers and peripherals. The appellant contended that the demand was not justified and the classification was incorrect. The advocate referred to various case laws to support the argument that the demand was solely based on the statement of the Accounts Manager and could not be sustained. The appellant also argued that the order passed by the Commissioner(Appeals) was contrary to the principles of natural justice as no reasons were recorded for rejecting the appeal. The Tribunal found that the order lacked reasoning and set it aside, remanding the case back to the Commissioner(Appeals) for a well-reasoned decision, as per the principles laid down by the Hon'ble Supreme Court.

2. The appellant argued that there could be no demand of service tax under Business Auxiliary Service as Information Technology Services were excluded from the scope of service tax during the relevant period. Additionally, the repair of computers and peripherals was exempted from service tax. The appellant contended that their work was composite in nature and could not be vivisected to levy service tax. The Tribunal noted these arguments and emphasized the need for a detailed consideration of whether the appellant rendered Manpower Recruitment and Supply Agency Services & Business Auxiliary Service, as per the definitions provided under the Finance Act, 1994.

3. The Tribunal observed that the learned Commissioner(Appeals) had mechanically endorsed the order of the adjudicating authority without providing a proper discussion on the liability of the appellant to discharge service tax. The order was deemed cryptic and unreasoned, leading to its set aside. The Tribunal highlighted the importance of a well-reasoned order and the appellant's right to a fair opportunity to present their case. As a result, the appeal was allowed by way of remand, emphasizing the necessity for a detailed and reasoned decision in the matter.