2015 (10) TMI 1856 - AT - Service Tax

Liability of Service Tax on recruitment of manpower and supply services extended period of limitation - Held That - Services of supply various personnel to shipping companies are taxable under Manpower Recruitment and Supply Agency Services - Extended period of limitation cannot be invoked since the information was available with the department well in advance - Further, appellant could have entertained a bona-fide belief that they are acting as a pure agent while transmitting the amount of salaries, wages and allowances Shipping Corporation of India to the staff supplied by them. - SCN demanding the service tax for the period July 2005 to March 2007 is hit by limitation except for the period which is within limitation - Decided partially in favour of Appellant.

Summary

Issues involved:
Liability to discharge service tax under the category of recruitment of manpower and supply services; Applicability of limitation period for the show cause notice issued.

Analysis of the Judgment:

Issue 1: Liability to discharge service tax under the category of recruitment of manpower and supply services
The case involved the appellant supplying manpower to shipping companies and receiving amounts as consideration towards wages and service charges. The appellant contested a show cause notice for demand of service tax under Manpower Recruitment and Supply Agency Services. The appellant argued that the services should be classified under Ship Management Services and that they acted as a pure agent, remitting salaries and wages received from the shipping corporation to individuals. The departmental representative cited a previous case in favor of the Revenue. The Tribunal found that the services of supplying personnel to shipping companies were taxable under Manpower Recruitment and Supply Agency Services during the relevant period, and rejected the appeal on merits.

Issue 2: Applicability of limitation period for the show cause notice issued
The appellant claimed that the show cause notice was hit by limitation as there were exchanges of correspondence with the authorities prior to the notice being issued. The appellant argued that they believed they were only required to pay tax on service charges. The Tribunal noted the correspondence between the appellant and the authorities, where the appellant provided requested documents in 2004, but no action was taken until the notice in 2008. Citing a previous case, the Tribunal held that the extended period of limitation could not be invoked in this case. The show cause notice demanding service tax liability for the period in question was held to be hit by limitation, except for the period within the limitation.

In conclusion, the Tribunal disposed of the appeal by rejecting the appellant's arguments on liability for service tax under the recruitment of manpower and supply services category, while ruling in favor of the appellant on the applicability of the limitation period for the show cause notice issued.