2014 (3) TMI 192 - AT - Service Tax

Waiver of pre deposit - Demand of service tax - Man Power Recruitment or Supply Agency - Held that - Applicants obtained licence under the Contract Labour (Regulation & Abolition) Act. Prima facie, it appears that the applicant is a contractor and supplied the labourers to M/s.TAFE, which would come within the definition of Man Power Supply - all the applicants are individual persons and the demands except in two cases are barred by limitation - we direct the applicants to pre-deposit the amounts - Upon making deposit, predeposit of balance amount of tax along with interest and penalty is waived and its recovery is stayed during pendency of the appeal - Conditional stay granted.

Summary

Issues:
1. Tax demand under "Man Power Recruitment or Supply Agency" service for the period 16-06-2005 to 2010.
2. Confirmation of demand of service tax, interest, and penalty by the adjudicating authority.
3. Interpretation of agreements between individuals and M/s. Tractors and Farm Equipments Ltd.
4. Applicability of Board's Circular on supply of manpower services.
5. Consideration of extended period of limitation for demands.
6. Determination of whether the applicants are contractors supplying laborers.
7. Requirement of pre-deposit amounts for admission of appeals.

Analysis:
The judgment addressed multiple appeals with a common issue of tax demand under the category of "Man Power Recruitment or Supply Agency" service for the period 16-06-2005 to 2010. The applicants had entered into agreements with M/s. Tractors and Farm Equipments Ltd. to engage workers. The adjudicating authority confirmed the tax demand, which was upheld by the Commissioner (Appeals). The contention was whether the applicants supplied workers, as per the agreements, falling under the definition of "Man Power Supply Agency Service."

The advocate representing the applicants argued that the workers were engaged in specific contracts for manufacturing operations at the factory premises, not supplied as laborers. He cited a Board's Circular and a Tribunal decision to support his case, emphasizing that demands were time-barred in many instances. On the contrary, the Revenue's representative highlighted that the applicants held licenses under the Contract Labor Act and were supplying workers to M/s. TAFE, justifying the tax demand.

After hearing both sides, the Tribunal found merit in the Revenue's argument, indicating that the applicants, by supplying laborers with licenses under the Contract Labor Act, fell under the definition of "Man Power Supply." The Tribunal directed the applicants to pre-deposit specific amounts within eight weeks for appeal admission, with a waiver of the balance tax, interest, and penalty upon such deposit, and stay on recovery during the appeal's pendency. The judgment emphasized the need for compliance reporting by a specified date.

In conclusion, the judgment analyzed the nature of agreements, applicability of regulations, and the interpretation of services provided by the applicants to determine tax liability under the "Man Power Recruitment or Supply Agency" service. The decision underscored the importance of pre-deposit amounts for appeal admission and compliance with reporting requirements.