2018 (8) TMI 1337 - AT - Service Tax

Manpower Recruitment and Supply Agency Service - whether the amounts paid to ESIC and EPF in the course of providing taxable services to the customers under the category of Manpower Recruitment and Supply Agency service be included in the gross taxable value or otherwise? Held that - This Tribunal in the case of Neelav Jaiswal 2013 (8) TMI 147 - CESTAT NEW DELHI observed that the amount contributed towards EFP in relation to Manpower Recruitment and Supply Agency service is includible in the taxable value of the services rendered - there is no merit in the appeal - appeal dismissed.

Summary

Issues:
- Whether amounts paid to ESIC and EPF in the course of providing taxable services should be included in the gross taxable value.

Analysis:
The appeal was filed against Order-in-Appeal No. AV(76)54/2014, where the appellant was providing taxable services under 'Manpower Recruitment and Supply Agency Service' during 2007-08 to 2009-10. The appellant had short paid Service Tax due to an incorrect determination of the assessable value of the services provided. A show-cause notice was issued for recovery of the Service Tax, interest, and penalty. The demand was confirmed with interest and penalty after adjudication. The appellant then appealed before the Commissioner (Appeals), who rejected their appeal, leading to the present appeal.

The main issue in this case was whether the amounts paid to ESIC and EPF in the course of providing taxable services under 'Manpower Recruitment and Supply Agency Service' should be included in the gross taxable value. The learned AR for the Revenue argued that this issue was settled by a previous judgment of the Tribunal in the case of Neelav Jaiswal & Brothers Vs. Commissioner of Central Excise, Allahabad. The Tribunal in the Neelav Jaiswal case observed that the amount contributed towards EPF in relation to the service is includible in the taxable value of the services rendered. It was noted that the liability to remit Provident Fund to Provident Fund Authorities is a statutory obligation on the employer providing the service, and both the amount agreed upon for remunerating personnel and the amount of provident fund payable constitute the gross amount charged for the taxable service provided.

Based on the precedent set by the Neelav Jaiswal case, the Tribunal in the present appeal found no merit and dismissed the appeal. The Tribunal held that the amounts paid to ESIC and EPF in the course of providing taxable services under 'Manpower Recruitment and Supply Agency Service' should indeed be included in the gross taxable value. The appeal was accordingly dismissed, and the operative portion of the order was pronounced in court.