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TMI Blog2018 (4) TMI 1504X X X X Extracts X X X X X X X X Extracts X X X X ..... TAT, CHENNAI], wherein the Tribunal has clearly laid down that appellants therein had undertaken only supply of skilled man power. There is no infirmity in the impugned order concluding that the activity of the appellant would fall within the fold of “Manpower Recruitment or Supply Agency Service” under Section 65 (105) (k) of the Finance Act, 1994. Services provided outside India and to SEZ - Held that: - the contentions of the appellant that services provided to SEZ units would be exempt vide Notification No.4/2004-ST have been brushed aside by the Commissioner - the matter requires reconsideration. Extended period of limitation - suppression of facts - Held that: - The facts came to light only when the department conducted scrutiny of the annual reports, possibly during audit. In such circumstances, the department is fully justified in invoking the extended period of limitation of five years - while the demand has been made from 16.6.2005, for the period 1.4.2005 to 15.6.2005 the demand is erroneous since the impugned Manpower Recruitment of Supply Agency Services was made taxable only w.e.f. 16.5.2005. Penalty - Held that: - benefit of doubt can be given to the appellant that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he clients from time to time. For this purpose, the employees of the appellant would be assigned either to such software companies' premises or to the premises of the ultimate clients, where the actual project is being undertaken. The appellant during the material period have been rendering such services to clients such as TCS, INFOSYS, etc, based on bipartite agreements, entered into from time to time, for provision of software services at the client's premises. ii) The subject matter of the dispute revolves around classification of the services provided by the appellant to M/s.Tata Consultancy Services (TCS) and M/s.Infosys Technologies Ltd. (Infosys), in terms of the agreements entered into with them. During the initial period, the software projects obtained by TCS, would be sub-contracted to various sub-contractors like the appellant, on a case to case basis. A Business Associate Agreement, dated 04.12.2007 was entered into between the appellant and TCS, a copy of which is available in Page 1 of Volume II of the paper book. Similarly, a Sub contracting agreement dated 13.01.2006 has been entered into between the appellant and Infosys, a copy of which is available from page No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Future Focus Infotech India (P) Ltd.Vs CST Chennai - 2010 (18) STR 308 (Tri.-Chennai) where identical activity provided by the appellants therein had been held to be falling within the scope of Manpower Recruitment or Supply Agency Service. 4. Heard both sides and have gone through the facts. 5. The matter that comes up for decision concerns whether the activities of appellant would fall within the scope of "Manpower Recruitment and Supply Agency Service" or whether it can be said that they provide Information Technology (IT) service. 6.1 Various agreements in Vol-II of the appeal have been gone through. These agreements indicate that services provided by the appellants were supply of technically qualified man power to TCS, Infosys etc. For example, in the agreement dt. 4.12.2007 on page 3 of Vol-II, it is mutually agreed upon that appellant would provide selected employees to work on the computer software application development of specific projects to be identified and allocated by TCS at the sole and absolute discretion of the latter; to carry out such functions and project related activities as may be allocated by TCS on a fixed man month basis under overall guidance and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TCS and Infosys personnel in-charge of projects 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." 6.3 We do not find any new facts or evidence requiring a deviation from the ratio laid down by the Tribunal in the Future Focus Infotech India decision (sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is erroneous since the impugned Manpower Recruitment of Supply Agency Services was made taxable only w.e.f. 16.5.2005. So ordered. 6.7 We also find merit in the plea for grant of cum tax benefit as there is no allegation that appellants have collected tax from their clients. We therefore hold that there is a case for grant of cum tax benefit. 6.8 Coming to the issue of penalty, benefit of doubt can be given to the appellant that they were under bonafide belief that no tax is required to be deposited by them on the services provided. Ld. Advocate has also pointed out that they had obtained a clarification from their client TCS, one of the reasons why they did not discharge the liability. These facts, in our view, are valid reasons and appellant had reasonable cause for their failure to discharge tax liability. Hence we hold that provisions of Section 80 of the Finance Act can be invoked and penalty imposed under Sections 76 & 78 can be set aside. So ordered. 7. In the event, we hold and order as under : (a) The services provided that appellant fall within the category of Manpower Recruitment or Supply Agency Service. The order of the adjudicating authority on this score is uphel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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