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TMI Blog2018 (4) TMI 1041X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the appellant was supplying skilled manpower for which it was liable to pay service tax for supply of manpower services. The facts in the case of Cognizant Tech. Solutions. [2010 (3) TMI 328 - CESTAT, CHENNAI] are different and will not apply to present case, as in that case Cognizant Tech. Solutions were themselves responsible for the development, information technology software etc., whereas in the present case appellants are only supplying man power to TCS in Special Economic Zones and other similar organizations as per the requirements and that the appellants are not engaged in development of any software on their own. The appellants are therefore liable for discharging tax liability on the value of taxable services in respect of these services. In respect of services provided to SEZ units - As per the overriding effect of Section 26 51 of the SEZ Act 2005 read with Rule 10 of SEZ Rules 2005, they would be eligible for exemption from payment of service tax and also for the exemption extended in Notification No.4/2004-ST dt.31.03.2004 - The adjudicating authority has not considered this claim of the appellant on the ground that sufficient documents have not been p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sition of penalties. The details of said show cause notices are tabulated below :- S.No. SCN No. Period O-I-O (Impugned order) ST Amount Penalties 1. 250/2008 dt. 26.09.2008 October 2007 to March 2008 2/2010 dt. 26.04.2010 83,38,465 Rs.200 per day/2% pm (Sec.76) 2. 233/2009 dt. 14.05.2009 April 2008 to September 2008 52,05,985 Rs.200 per day/2% pm (Sec.76) 3. 211/2009 dt. 22.04.2009 April 2007 to March 2008 10,52,160 Rs.200 per day/2% pm (Sec.76) ₹ 10,52,160 (Sec.78) These show cause notices culminated in Order No.2/2010 dt. 26.04.2010 (impugned order) where the adjudicating authority has confirmed the activities of the appellant under Man Power Supply or Recruitment Agency Service and rejected the claim for exemption under Notification No.4/2004-ST for services rendered to units in Special Ec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the SEZ unit is entitled to procure services without payment of service tax and provisions of SEZ Act shall have overriding effect over the provisions of any other law. However, Commissioner has not accepted their submission only on the ground that they have not provided any invoices raised for providing services to SEZ units and also that certificates in some cases issued by Development Commissioner have not been produced. iv) Demand on TDS component for post-16.05.2008 is not sustainable as the said services have been provided only to SEZ units. v) The demand from April 2007 to September 2007 is hit by limitation as the issue has been seized by the department in previous notices. The internal audit party did not raise any objection on nonpayment of service tax on TDS component. 4. On the other hand, Ld. A.R Shri K.P. Muralidharan supports the impugned order. He submits that the Adjudicating Commissioner has analyzed various contracts entered into by the appellant and has clearly found that the activities carried on by them are only in the nature of man power supply services. Ld. A.R also submits that the very same dispute had been addressed by the CESTAT, which has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts undertaken by TCS and Infosys. The appellants are getting paid in terms of the man hours for the persons deputed to work under the control and supervision of TCS and Infosys. 13. No doubt there are clauses relating to deliverables and quality of work in the contracts but these by themselves do not indicate that the appellants are providing information technology software services to TCS and Infosys. Any person or organization obtaining skilled personnel has to ensure that such men deliver work of standard quality. No one would employ a person who is not skilled enough and no one would pay for shoddy work even if done by a skilled man. The relevant clauses in the contract in this regard on which much emphasis was sought to be put by the learned senior counsel for the appellants have to be viewed in the light that TCS and Infosys are merely seeking to obtain personnel from the appellants with necessary skill who will work diligently on the projects undertaken by TCS and Infosys. 14. The learned special counsel for the Department has rightly pointed out a significant provision in the contracts which require the appellants to replace personnel who leave the job by suitabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l services to Pfizer relating to data management, bio-statics and reporting through the same man power which has been recruited, retained and trained; consequently these are in the nature of IT services as the same relates to data management. The relevant portion of the Tribunal decision in Cognizant case is reproduced for ready reference : 10. We find force in the contentions made by the appellants that the work force recruited and retained by the appellants are required to work under a project manager appointed by the appellants who has to act as single point of contact being responsible for overall management of the project. From the arguments advanced from both sides, it is clear that the learned special counsel for the Department is not disputing that in the second stage of the project, the appellants would be providing functional service to Pfizer. It is also not in dispute that such functional service relating to data management, bio statistics and reporting will be provided through the very same manpower which has been recruited, retained and trained during the first phase. It has to be appreciated that recruitment and training precedes provision of specialized service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present appeal also. Ld. Advocate has been at pains to take us to various contracts / agreements with TCS, Infosys etc. to contend that they were in fact engaged in information technology activities and not in merely supplying of man power. However, a close look of the very same agreements touched upon by the ld. Advocate lead us to contrary findings. For example, in the contract with TCS dt. 13.05.1997 at page 123 of the appeal book, it has been clearly mandated that trained staff of the appellant will be exclusively used for TCS related work . So also, in the Business Associate Agreement dt. 1.7.2003, between the appellant and TCS, found in page 180 of the appeal book, a reference is made to a pool of highly skilled and specialized Employees experienced in the development, enhancement, implementation and maintenance of software projects . It is also indicated therein that the appellant would be deputing its employees to TCS and TCS client locations, to work on the project with TCS project team. In the scope of the activities of the appellants in para-3 of the agreement, it is provided that appellant will offer services of its selected employees to work on the development, im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant will definitely fall only within the scope of Man Power Supply or Recruitment Agency Service as defined in Section 65 (105) (k) of the Finance Act, 1994. The appellants are therefore liable for discharging tax liability on the value of taxable services in respect of these services. 6.10 However, we find merit in the contention of the appellant in respect of services provided to SEZ units. As per the overriding effect of Section 26 51 of the SEZ Act 2005 read with Rule 10 of SEZ Rules 2005, they would be eligible for exemption from payment of service tax and also for the exemption extended in Notification No.4/2004-ST dt.31.03.2004. The adjudicating authority has not considered this claim of the appellant on the ground that sufficient documents have not been produced by the appellants. We consider it proper to remand this issue to consider the appellant s submissions in this regard. In such de novo adjudication, the authority concerned will examine the eligibility of the claim of exemption on the basis of documents produced by the appellant. Additional documents, if required, are also permitted to be produced by the appellants during such de novo adjudication. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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