2020 (8) TMI 111 - HC - Service Tax

Extended period of limitation - - Manpower Recruitment or Supply Agency Services - two views of the Tribunal itself in two different orders - HELD THAT - The Tribunal has not at all assigned proper reasons for its order on the said issue no. 4, regarding taxability of the manpower services provided by the Assessee, and whether in those facts and circumstances of the case, the extended limitation could be invoked by the Department or not. Without discussing the relevant facts and ratio of its two judgments, referred to and relied on by the learned Tribunal, and the facts of the case of the respondent/Assessee, merely writing these citations in the said order itself is not enough. The order of the final fact finding body at the level of Tribunal has to be self contained and should discuss the relevant facts and reasons for arriving at a particular conclusion. The higher Constitutional Courts hearing the appeals against such orders cannot be expected to delve deeper into the study of facts and ratios of the orders of the learned Tribunal, in the manner in which the learned Tribunal perhaps thought. Mere reference of the citations in the order and then holding that the extended limitation could not be invoked to the Revenue is a serious prejudice caused to the interest of the Revenue, in the absence of discussing the relevant facts, and giving reasons, for arriving at a particular conclusion. We are restraining ourselves from expressing anything further on the tenor of the order passed by the learned Members of the Tribunal in the present case. The appeal restored back to the learned Tribunal, with a request to hear the appeal de novo on the said issue and decide the same as expeditiously as possible.

Summary

Issues:
Taxability of service tax on manpower supplies; Application of extended limitation period in tax demand; Proper reasoning and discussion in tribunal orders.

Analysis:
1. Taxability of service tax on manpower supplies:
The appeal in this case was filed by the Revenue against the order of the Tribunal regarding the taxability of service tax on manpower supplies provided by the Assessee. The issue revolved around whether the service tax was payable under the category of Manpower Recruitment or Supply Agency Services for the supply of IT-related services. The Tribunal discussed the conflicting views in previous cases, such as M/s. Future Focus Infotech India (P) Ltd. and M/s. Cognizant Tech. Solutions (I) Pvt. Ltd., where one favored the Revenue and the other favored the Assessee. The appellant argued against the intention to evade payment of duty based on these conflicting views. Ultimately, the Tribunal, following the decision in M/s. Coromandel Infotech India Ltd., set aside the demand invoking the extended period, ruling in favor of the appellant.

2. Application of extended limitation period in tax demand:
The Tribunal's decision to set aside the demand invoking the extended period was based on the existence of conflicting views in previous cases regarding the taxability of similar services. The Tribunal noted that since there were two possible views, as seen in the decisions of M/s. Future Focus Infotech India (P) Ltd. and M/s. Cognizant Tech. Solutions (I) Pvt. Ltd., the demand could not be sustained under the extended period. The High Court, upon review, agreed with the Tribunal's application of the precedent set in M/s. Coromandel Infotech India Ltd. and upheld the decision to set aside the demand, thereby allowing the appeal with consequential reliefs.

3. Proper reasoning and discussion in tribunal orders:
The High Court expressed dissatisfaction with the Tribunal's lack of proper reasoning and discussion in its order regarding the taxability of manpower services and the application of the extended limitation period. The Court emphasized the importance of a self-contained order that discusses relevant facts and reasons for reaching a particular conclusion. The Court criticized the Tribunal for not delving deeper into the facts and ratios of previous orders, leading to serious prejudice to the Revenue. As a result, the High Court set aside the Tribunal's order on the taxability issue, requesting a de novo hearing to decide the matter expeditiously and urging future tribunal members to understand the significance of proper reasoning and discussion in their orders.

In conclusion, the High Court's judgment addressed the issues of taxability of service tax on manpower supplies, the application of the extended limitation period in tax demands, and the necessity for proper reasoning and discussion in tribunal orders. The decision highlighted the importance of considering conflicting views in previous cases and ensuring thorough analysis and explanation in legal judgments to avoid prejudice and ensure justice.