2014 (9) TMI 880 - AT - Service Tax

Discrepancy in ST-3 returns and balance sheet - Manpower Supply Service - payment made in foreign exchange to the foreign service providers - International Financial Corporation is not notified as international agency to which rendering of service is exempt from service tax. - Held that - regarding services provided to SEZ units, no service tax is payable on services provided to SEZ units - stay granted on this issue. On the issue of demand due to difference in ST-3 return, the contention of the appellant is correct inasmuch as the demand has been confirmed only on the basis of the difference found between the figures in their ST-3 returns and their balance sheet without mentioning for which taxable service the demand is confirmed. - stay granted on this issue. Implementation of the development programme aimed at training rural BPL youths - Held that - Aim of the said skill development programme is training, skill development and capacity building of the rural poor to enhance their employability or capacity for self-employment. Indeed, it is similar to what the Govt. run Industrial Training Institutes (ITIs) do. Looking at the definition of Manpower Recruitment Supply or Agency, prima facie appellants cannot fall thereunder and consequently they cannot be held to have provided manpower recruitment and supply service. - stay granted on this ground. Services provided to International Financial Corporation - international agency or not - held that - IFC is not listed in the list of International bodies eligible for the exemption availed of by the appellants. The appellant s contention that IBRD and IFC are both constituents of World Bank and as IBRD is mentioned as one of the eligible organisations for such exemption, the same should be made available to IFC also even if IFC is not so mentioned, is totally untenable and mis-conceived. - prima facie case is against the assessee - stay granted partly.

Summary

Issues Involved:
1. Stay application against Order-in-Original confirming service tax amount, interest, and penalties.
2. Components of the impugned demand: discrepancies in ST-3 returns, service to International Financial Corporation, payments under Swarnjayanti Gram Swarojgar Yogna, and payment made in foreign exchange.

Analysis:
1. Component (i) of the demand - &8377; 35,82,676/-:
The appellants contested the demand related to discrepancies in ST-3 returns, arguing that no service tax is payable on services provided to Special Economic Zone units. The Tribunal found merit in the appellant's contention as the demand was confirmed without specifying the taxable service. Hence, the Tribunal stayed the recovery of this component.

2. Component (ii) of the demand - &8377; 3,30,011/-:
The demand was confirmed due to the International Financial Corporation not being listed for the exemption availed by the appellants. The Tribunal rejected the appellant's argument regarding the eligibility of IFC for exemption, stating that there was no case for staying the recovery of this component.

3. Component (iii) of the demand - &8377; 23,44,07,478/-:
The appellants argued that the demand on payments received for implementing a development program under Swarnjayanti Gram Swarojgar Yogna did not fall under Manpower Supply Service. The Tribunal analyzed the nature of the program and concluded that the appellants were not engaged in providing manpower recruitment or supply service. Therefore, the Tribunal stayed the recovery of this major component of the demand.

4. Component (iv) of the demand - &8377; 71,734/-:
The demand related to payment made in foreign exchange was not contested by the appellants. As they acknowledged and claimed to have paid it, no further discussion was needed, and the recovery was not stayed.

5. Order and Conclusion:
The Tribunal ordered a pre-deposit of &8377; 4,01,745/- along with interest within four weeks. Subject to this pre-deposit and compliance, the recovery of the remaining amount of the impugned demand, interest, and penalties was stayed during the appeal's pendency. The stay application was disposed of, and the Misc. application for early hearing was dismissed.