2024 (11) TMI 1227 - AT - Service Tax

Short payment of service tax - Demand of service tax worked out after comparing the income declared in Form 26AS/ITR vis- -vis- taxable value disclosed in ST-3 return - Appellant had declared less/not declared any taxable value in their ST-3 return for F.Y. 2015-16 and 2016-17 as compared to the value declared in their form 26AS - appellant have provided Manpower Recruitment Service to various companies. HELD THAT - Appellant basically provided the Labours to the pharmaceutical companies as may be required to provide for packing, loading/unloading, cleaning and maintenance etc. works at factory. Appellant is responsible for deducting and remitting provident fund and ESIC contributions and also for payment of wages to labours and other dues, and also shall require to maintain records and registers, obtain any license or registration required by law for supply of workmen/labour. Further conditions of agreements clearly indicate that the Appellant is supplying Labour/manpower to the pharmaceutical companies. We find that the tenor of the agreements clearly indicate that the Agreement entered into by the appellant is a Labour Supply Contract and so the services rendered would fall under Manpower Recruitment or Supply Agency service. Notification No. 30/2012-ST dtd. 20.06.2012 amended vide Notification No. 7/2015 -ST dtd. 01.03.2015 provides, in case of Manpower Supply Service 100% service tax is payable by the Service recipient w.e.f. 01.03.2015. Before this amendment Service provider was required to pay 25% service tax and 75% service tax was required to be paid by the Service recipient. In the present matter Appellant provided the manpower supply service to above pharma companies on which as per the above provisions service recipient is required to pay 100% Service tax. We also noticed that in the present matter on the Appellant s service aforesaid pharma companies have paid the service tax. The Appellant also produced before us the copies of Challans and certificate issued by said pharma companies regarding the payment of service tax on the appellant s activity. In the present disputed matter service recipient itself considered the nature of service of Appellant as Labour Supply/ Manpower Supply and discharged the service tax liability on said activity. Therefore, it is clear that the Ld. Commissioner have committed an apparent error in confirming service tax demand in the present matter. Since the service tax on entire value has been discharged there cannot be double taxation. In the present matter undisputedly the service tax has been paid by the Pharma companies on Appellant s activity. The demand of service tax from the Appellant would be double taxation on same amount which itself is erroneous. Hence the demand is not sustainable for this reason as held in case of Dinesh M. Kotian - 2016 (1) TMI 973 - CESTAT MUMBAI We find that tribunal in the case of Navyug Alloys Pvt. Ltd. 2008 (8) TMI 100 - CESTAT AHEMDABAD has held that once tax already paid on the services, it was not open to the Department to confirm the same against the appellant, in respect of the same services . Allow the appeal of appellant with consequential relief.

Summary

Issues:
1. Interpretation of service tax demand based on discrepancies in declarations.
2. Classification of services provided by the Appellant as Manpower Supply Services.
3. Applicability of service tax liability on the Appellant.
4. Validity of invoking extended period of limitation for demand.
5. Double taxation concern due to service tax already paid by service recipients.
6. Compliance with relevant legal provisions and agreements in determining service tax liability.

Analysis:
1. The appeal challenged an Order-in-Original that confirmed a service tax demand on the Appellant for discrepancies in declared values between ST-3 returns and third-party data. The Appellant argued that recipients had already paid service tax under reverse charge mechanism, leading to potential double taxation concerns. The Appellant contended that the demand was time-barred and there was no intention to evade tax, as all facts were disclosed to the tax authorities.

2. The Appellant asserted that the services provided were Manpower Recruitment Services, not liable for service tax as per Notification No. 30/2012-ST. The Appellant highlighted agreements with companies to show that they supplied labor for specific tasks, qualifying as Manpower Supply Services. The Appellant argued that any service tax liability should have been available as cenvat credit to the service recipients, ensuring revenue neutrality.

3. The Revenue, represented by the Assistant Commissioner, supported the impugned order's findings. The Tribunal analyzed the agreements between the Appellant and pharmaceutical companies, noting the nature of services provided, such as labor supply for various activities like packing, loading, and cleaning. The Tribunal referred to the decision in Super Poly Fabriks Ltd. v. CCE, Punjab to emphasize that the document's entirety determines the nature of the contract.

4. The Tribunal found that the agreements clearly indicated a "Labour Supply Contract," falling under Manpower Recruitment or Supply Agency services. It highlighted the amendment in Notification No. 30/2012-ST, indicating that the service recipients were liable to pay 100% service tax, which they had already done in this case. The Tribunal cited cases to support its stance that double taxation on the same value was impermissible.

5. Citing precedents like Navyug Alloys Pvt. Ltd. v. CCE & C, Vadodara, the Tribunal concluded that once tax had been paid on the services, confirming the demand against the Appellant for the same services would lead to unjust double taxation. Consequently, the impugned order was set aside, and the appeal was allowed with any necessary consequential relief.

This comprehensive analysis covers the issues raised in the judgment, detailing the arguments presented by both parties and the Tribunal's reasoning leading to the final decision.