2018 (6) TMI 1519 - AT - Service Tax

Classification of services - deputation of certain qualified technical staff to joint venture companies for performing the assigned duties - whether to be classified under the head Manpower Recruitment or Supply Agency s Service or otherwise? - Held that - Identical issue decided in appellant own case M/S GAIL (INDIA) LTD. VERSUS CST, NEW DELHI 2017 (6) TMI 1232 - CESTAT NEW DELHI , where it was held that no tax liability arise for such activity under category recruitment or supply of manpower service. The Appellant cannot be put to tax liability under the category of Manpower Recruitment or Supply Agency s Service for the activity now under dispute - appeal allowed - decided in favor of appellant.

Summary

Issues:
Liability of the appellant to pay service tax under the category of manpower supply services on deputation of its employees to Joint Venture Companies.

Analysis:
The appellant, in collaboration with two companies, had deputed technical staff to joint venture companies. The Revenue contended that this activity falls under "Manpower Recruitment or Supply Agency's Service" for tax purposes. The impugned order confirmed a significant service tax liability along with a penalty. The appellant relied on a previous order in their favor on the same issue. The authorized representative supported the findings of the impugned order.

Legal Precedents:
The CESTAT referred to a previous decision where it was established that the appellant, being a government undertaking engaged in gas processing, distribution, and marketing, was not a Manpower Recruitment or Supply Agency. The deputation of staff to joint venture companies was part of their obligations, and they received salaries from these companies based on actual work done. The tribunal cited other cases and high court decisions to support its conclusion that no tax liability arises for such activities under the category of "recruitment or supply of manpower."

Conclusion:
Following the precedent and legal reasoning, the CESTAT ruled that the appellant cannot be taxed under the category of "Manpower Recruitment or Supply Agency's Service" for the disputed activity. The impugned order was set aside, and the appeal was allowed in favor of the appellant. The decision was dictated and pronounced in the open court, resulting in the appeal being allowed.