9911796707
TMI Blog2021 (2) TMI 1022X X X X Extracts X X X X X X X X Extracts X X X X ..... recruitment or supply of manpower service. Appeal allowed - decided in favor of appellant. - Service Tax Appeal No. 20518 of 2019 - Final Order No.20037/2021 - Dated:- 18-2-2021 - SHRI S.S GARG, JUDICIAL MEMBER AND MR. P. ANJANI KUMAR, TECHNICAL MEMBER Smt. Sandhya Sarvode, Advocate for the Appellant Smt. C.V. Savitha, Authorized Representative for the Respondent ORDER The present appeal is directed against the impugned order dated 14.02.2019 passed by the Commissioner of Central Tax (Appeals) whereby the learned Commissioner has set aside the Order-in-Original passed by the Assistant Commissioner of Central Tax and allowed the appeal filed by the Department. The particulars of the appeal are given herein below: Particulars 1. Period involved April 2014 to September 2015 2. Show Cause Notice No. 221/2016 dated 10.11.2016 3. Order-in-Original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsferred over and above the amount paid as salary in relation to the reimbursements made. c. The expats are under the exclusive employment of the Appellants and the right to terminate the contract lies with the expats and the Appellants; and the expats shall act under the direction and supervision of the Appellants. There is an employer-employee relationship between the expat and the Appellants; and the Appellants are not liable to pay service tax as the term service under Section 65B(44) excludes provision of service by an employee to the employer in the course of, or in relation to, his employment. 2.1 Aggrieved by the said order , the Department filed appeal inter alia on the ground that the appellants are liable to pay service tax as there is no effective and absolute control over the assigned employees and that there is no existence of an employer-employee relationship. The learned Commissioner vide the impugned order allowed the appeal of the Department and set aside the Order-in-Original without any finding on interest or penalty. Learned Commissioner has accepted the contentions of the Department and inter alia held as under: a. The Parent Company has provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bound by any directions of the Parent Company; The Parent Company will not assume any risks for the work performed by the seconded employees. The Appellants shall have sole responsibility for payment of all employee taxes, compensation, wages, benefits, contributions, insurance and like expenses, if any, of the seconded employees in India; iv. The Appellants shall reimburse the Parent company for the remuneration paid to the seconded employees on behalf of Appellants including but not limited to salary, bonus, social security contribution, stock based compensation, other benefits and allowances and all out of pocket expenses incurred by the seconded employees paid by the Parent Company, including but not limited to business travel expenses and other miscellaneous expenses directly related to the secondment. The amount reimbursable shall be at actual costs incurred by the Parent Company, without any mark up; v. The Parent Company shall raise the debit note in United State Dollars on a monthly basis towards the reimbursements for the salaries and benefits paid to the seconded employees and such amounts shall be settled by the Appellants; vi. During the period of second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the foreign currency which has been paid by the appellant accordingly at cost without any mark-up. Learned Counsel also submitted that for the period prior to 01.07.2012, the taxable service of Manpower Recruitment and Supply Service was defined under Section 65(105)(k) of the Finance Act, 1994 read with Section 65(68) which defines expression Manpower Recruitment and Supply Service. He also submitted that in view of the definition of the Manpower Recruitment and Supply Service, the Parent Company cannot be considered as an Agency which is in the business of supplying manpower. He also submitted that the appellants are paying the salaries to the expats through the Parent Company only for administrative convenience and there is employer-employee relationship exists between the two. For this submission, he relied upon the decision in the case of Airbus Group India Pvt. Ltd. - 2016 (45) S.T.R. 120 (Tri.-Del.) and Taisei Corporation v. Commissioner of Central Excise, New Delhi 2017 (5) G.S.T.L. 61 (Tri. - Del.) wherein based on similar circumstance, the demand of service tax on manpower recruitment or supply agency was set aside holding that the service provider therein was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that for the purposes of this sub-clause, recruitment or supply of manpower includes services in relation to pre-recruitment screening, verification of the credentials and antecedents of the candidate and authenticity of documents submitted by the candidate; 6.1. Further, we note that the scope of Manpower Recruitment or Supply Agency service has been explained by Circular F.No. B1/6/2005-TRU dated 27.07.2005 as follows: 22.3 In these cases, the individuals are generally contractually employed by the manpower supplier. The supplier agrees for use of the services of an individual employed by him to another person for a consideration. The terms of the individual s employment may be laid down in a formal contract or letter of appointment or on a less formal basis . What is relevant is that the staff are not contractually employed by the recipient but come under his direction 6.2. Further, for the period post July 2012, the nomenclature bases classification of service tax was done away with and service was specifically defined under Section 65B (44) of the Finance Act, 1994. Clause 44 of Section 65B read as: (44) service means any activity carried out b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore 2012 with respect to the service tax implications on deputation of employees. In fact, the above exclusion in the definition of service amplifies the position of law to keep employees providing service to the employer in the course of their employment out of the purview of service tax. We have also examined the agreements entered into by the appellant with a group company which are specifically for provision of certain specialized services and are not related to supply of manpower which is evident from various clauses in the Agreements and we also find that group companies are not in the business of supplying manpower. Further, we find that the persons seconded to the appellant working in the capacity of employees and payment of salaries etc is made to such employees by group companies only for disbursement purposes and hence employeeemployer relationship exist and such an activity cannot be termed as manpower recruitment or supply agency and the whole arrangement between the appellant and its group companies does not fall under the taxable service of manpower recruitment or supply agency service as defined under the Finance Act, 1994. We also find that there is no servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lfilled, the element of taxability would not arise. 8. Further, the Hon ble High Court of Gujarat in the case of Commissioner of Service Tax Vs Arvind Mills Ltd, 2014(35) STR 496=2014-TIOL-441-HC-AHM-ST has held that even if the actual cost incurred by appellant in terms of salary remuneration and perquisites is only reimbursed by group of companies, there remains no element of profit or finance benefit. The arrangement is that of the continuous control and the direction of the company to whom the holding company has deputed the employee, such an arrangement is out of the ambit to be called manpower supply service. This Tribunal also in an identical case decided by Final Order No. 70436/2019 dated11.10.2019 by relying upon the case of Volkswagen India Pvt. Ltd. Vs. CCE, Pune-I -2014 (34) STR 135(Tri.-Mumbai) and the above discussed case law has held that the expatriates working under the assessee are the employees of the assessee as there is an employer-employee relationship. As such, there is no supply of manpower service which is rendered to the appellant by the foreign/holding company. Further, in the case of M/s India Yamaha Motor (supra) the Division Bench of this Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
