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TMI Blog2021 (2) TMI 1093X X X X Extracts X X X X X X X X Extracts X X X X ..... t the activity would fall under MRSA. The discussion in para 12.3 of the order in original indicates that mere supply staff / qualified personnel to premises of client is construed as MRSA by the lower authority which is erroneous. Even if parties agree that consideration will be based on the number of persons employed, what has to be looked into is whether the agreement is to execute the work for the client or merely supply the work force. What has to be examined is the core activity for which the agreement is entered between parties. The clients are not in IT related fields. They need services in the nature of annual maintenance of systems, testing, developing of software etc. The disputed transactions as per agreement do not reflect ingredients required for MRSA. There is no iota of evidence to show that the appellants were rendering MRSA service during the disputed period. On merits, the issue is settled by the decision in the case of Cognizant Tech Solutions [ 2010 (3) TMI 328 - CESTAT, CHENNAI ] where it was held that The assistance in recruitment and imparting of specialized training for the recruited personnel cannot be held against the appellants claim that they have not s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase. 8. We hope and expect that the learned Members, and even other Members, who deal with the appeals from now onwards, in such Revenue matters, should understand the letter and spirit of these observations of the High Court. 9. We accordingly set aside the said order of the learned Tribunal on the said issue no.4, regarding taxability of manpower services and application of extended limitation in the present case and restore the appeal 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. We are not in a position to answer the questions raised by the Revenue in the present appeal at this stage, for the aforesaid reasons. 10. The appeal is accordingly disposed of, without any order as to costs. 2. Issue No. 4 is in regard to the demand of service tax on Manpower Recruitment or Supply Agency Service (hereinafter referred to as MRSA services) for the period 16.6.2005 to 2007 08. 3. The appellant is engaged in providing information technology related solutions including maintenance of software etc. They are paying service tax under Information Technology Software Services after such services have be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Tribunal s finding that ERP management services were classifiable under Information Technology Software Services with effect from 16.5.2008 and therefore could not be taxed under Management Consultancy Services for the period prior to 16.5.2008. The case of the department that service tax is liable on the same activity under MRSA prior to 16.5.2008 will not survive because the same transaction is accepted by the department to be Information Technology Software Services for the period after 16.5.2008. 5. Moreover, the services are predominantly provided by the appellant to companies who are not in the field of IT or software development. This will go to show that the appellant was providing Information Technology Software Services to these clients and not MRSA service. The facts are similar to the facts in the case of Cognizant Tech Solutions decided by the Tribunal as reported in 2010 (18) STR 326 (Tri. Chennai). In Cognizant Tech Solutions, the Tribunal observed that though personnel had been recruited specifically to fit the standards specified by Pfizer, the responsibility of the assessee therein did not end with supplying the personnel, the assessee was responsible for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices. 9. He pointed out that in the Show Cause Notice as well as Order in Original, the department has recorded the transactions under dispute as being various IT related services only. In the Order in Original, the adjudicating authority has discussed only three contracts before misconstruing the obligations emanating out of these contracts. The adjudicating authority has wrongly relied upon the decision of the Tribunal in M/s. Future Focus Infotech Pvt. Ltd. The decision in M/s. Future Focus Infotech Pvt. Ltd. and the entire line of decisions following M/s. Future Focus Infotech Pvt. Ltd. are distinguishable on facts from the appellant s contracts. The workforce allocated to the customers premises by the appellant is only a means of rendering said software services. Therefore, the decision in Cognizant Tech Solutions (supra) would be wholly applicable with the instant case and the demand cannot sustain. 10. It is also argued by the ld. Counsel that the appellant is not a manpower supply agency. They are not engaged in supply of manpower in any manner. The objects of Memorandum of Association of the appellant would bring out that they are not engaged in manpower supply agency. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal set aside the demand in Cognizant Tech Solutions (supra 2010). Since there was a very narrow distinction between the facts in these cases, the same was discussed by the Tribunal in Coromandel Infotech India ltd. Vs. Commissioner 2019 (1) TMI 323 CESTAT Chennai. The Tribunal set aside the demand in Coromandel Infotech for the extended period of limitation on a finding that the issue was interpretational. In various cases, it has been held that when the issue involves interpretation of application of legal provisions and applicability of facts, the invocation of extended period cannot sustain. He further stated that the decision in Cognizant Tech Solutions (supra) has attained finality as the department has accepted the ratio therein. Once the dispute has been accepted by the Revenue, they are not permitted to agitate the same issue in another assessee s case. To support this argument, he relied upon the decision of the Hon'ble Supreme Court in the case of Boving Fouress Ltd. Vs. CCE 2006 (202) ELT 389 (SC). In the case of Calcutta Industrial Supply Corporation Vs. Commissioner 2019 (31) GSTL 487 (Tri.) it was held that extended period of limitation is not invocable in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... To any person, by a manpower recruitment or supply agency in relation to the recruitment or supply of manpower, temporarily or otherwise, in any manner Explanation for the removal of doubts, it is hereby declared 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 16. Further, Information Technology Software Services which was inserted by Finance Act, 2008 with effect from 16.5.2008 is defined under section 65(53a) as under:- Section 65(53a) of Finance Act, 1994 Information technology software means any representation of instructions, data, sound or image, including source code and object code, recorded in a machine readable form, and capable of being manipulated or providing interactivity to a user, by means of a computer or an automatic data processing machine or any other device or equipment 17. From the definition of manpower recruitment supply agency service noticed above, it can be seen that the activity should be recruitment or supply of manpower, temporarily or otherwise. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appearing for the appellant that there is a conflict in the decisions rendered by the Tribunal in their own case dated 3.3.2010 and the decision rendered in Cognizant Tech Solutions on the same date. A request was made to refer the issue to larger Bench. (Para 3(i)of the decision in Future Infotech Final Order dated 27.2.2018). The Bench looked into the facts of both these decisions and came to the conclusion that although on the first blush, the facts may appear similar, there is discernable differences. The Tribunal observed that M/s. Future Focus Infotech was providing manpower to their clients TCS, Infosys etc. and that the software or IT development was done only TCS, Infosys etc. It was concluded in Final Order dated 27.2.2018 that the activity rendered by the assessee would fall under MRSA and that the decision in Cognizant Tech Solutions will not apply. 20. The Tribunal in the appeal before us, in its earlier order dated 27.2.2019 while disposing the appeal had referred to both these decisions and also to the decision in the case of Coromandel Infotech India Ltd. Reported in 2019 (1) TMI 323 CESTAT Chennai. In para 6 to 8 of the order in Coromandel Infotech India Ltd., the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... INR 200,000. The rates for the resources are programmers (PL/SQL, BO)-INR85,000, Project Manager / BA INR1,20,000 (ii) Central Bank of India Annual Maintenance Contract Preventive and corrective maintenance of the computer systems / machines and will include supply and replacement of unserviceable parts All maintenance / repairs shall be attended by the contractor (M/s. Sak Soft Ltd.) or authorized personnel of the contract. M/s. Sak Soft Ltd. Shall provide remote defect management support for the EBT-FX software used by Central Bank of India (iii) Citigroup Information Technology Operations and Solutions (CITOS) Service Agreement Supplier (M/s. Sak Soft Ltd.) will provide CITOS software services such as Application Development, Testing and Quality Assurance, Support and Maintenance and Consultants on contract on a need basis (iv) GE Money (GE Capital Corporation) Master Services Agreement GE Capital Corporation, the company wishes to authorize the contractor (M/s. Sak Soft Ltd.) to perform certain software related services in accordance with this agreement. The parties understand that the work to be undertaken by the contractor under this agreement will be performed in part by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0% of placement cost incurred by M/s. Saksoft Ltd. at the time of recruitment. In respect of those of M/s. Saksoft Ltd. employees who have left the services of M/s. Saksoft Ltd and three months period have since lapsed, M/s. Scope International Pvt. Ltd shall have a right to recruit employees upon such application and in such an event no compensation as mentioned above shall be payable. (ix) Societe Generale Global Solution Centre Pvt. Ltd. Consultant Service Agreement Creating and developing software, IT enabled service and IT consulting for its own banking group Societe Generale globally (x) Acsys Software India Pvt. Ltd. Purchase orders towards provision of software manpower services Resource provisioning:- 1. Team Lead 1 No.; Developers 5 to 7 Nos. Tester 1 No. The team shall predominantly work on converting a few existing software Applications into Dot Net Applications such as Extract the ASSP codes of existing applications Prepare project plan with mile stones Build them into Dot Net Applications with design changes if necessary Prepare test cases and perform unit testing as well as system level testing Implementing the Applications Documentation Any other software design, de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises. (b) In the event of the work carried out by the contractor or the contractor s employees is not found to be satisfactory, the contractor upon notification from the ABN AMRO shall immediately take all necessary steps so as to provide prompt and effective services. (c) The contractor agrees that the employees engaged by the contractor shall be permitted to remain on the premises of the ABN AMRO as per the timings indicated by the ABN AMRO. However, prior permission will have to be obtained by the contractor / the contractor s supervisors from the ABN AMRO in the event of the contractor s employees being required to remain on the ABN AMRO s premises beyond the aforesaid stipulated time and / or on Sundays and fixed public holidays for any reason whatsoever. From the agreements, it can be seen that the control and supervision of the staff / qualified personnel supplied to the premises of the client (ABN AMRO Bank) is with the appellant (contractor) only. Though certain personnel are supplied to the premises of the client for carrying out work / job of the client, it cannot be said that the activity would fall under MRSA. (ii) Central Bank of India The scope of work summarized in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional resources that could be used to staff unexpected, even temporary, increases in the forecasts. These additional resources will be committed to the task once the contractor has accepted the confirmed task orders. 3.4 The contractor will be solely responsible for maintaining satisfactory standards of personnel competency, conduct and integrity and for taking such disciplinary action with respect to all such personnel as may be required under the circumstances. Further, in clause 3.8 to 3.10, the agreement reads as under:- 3.8 The contractor will ensure that prior to their deployment, the personnel the contractor provides to work on the company s task orders are provided training that is adequate to ensure that they are proficient and able to discharge their duties, as defined by such task order. The company reserves the right to require the contractor to provide training specific to the execution of task orders, free of cost to the company, if personnel are either inadequately trained or need specialized training for the execution of task orders at the company s discretion. 3.9 The company follows ISO 9001:2000 methodology of quality management, measurement and continuous impro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (d) It shall be the responsibility of the supplier to ensure that the staff while on a project or otherwise assisting the supplier in providing services under this agreement shall dedicate sufficient time and effort as may be required for such services. From the above conditions in the agreement, it can be seen that the control and supervision of the staff / qualified personnel supplied at the premises of HDFC Bank solely rests with the appellant herein. The activity cannot fall within the definition of MRSA. (vi) Punjab National Bank It is stated in Col. 2 that the scope of work is annual maintenance contract and software related works only. (vii) SAK Consumer Retail Services Ltd. From Col. 2 of the show cause notice, it is seen that the work order is for automated application for the business of the client. (viii) Scope International Pvt. Ltd. In Col. 2 of the show cause notice, it is mentioned that the services and activities related to back office transaction services relating to retail, credit cards, corporation, treasury operations etc. software development and activities relating to maintenance of software and hardware infrastructure. On perusal of the agreement entered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned in Col. 2 that the services was for creating and developing software. (x) Acsys Software India Pvt. Ltd. From the description of work in the second column of the show cause notice, it is clear that the activity is IT related services. (xi) Bajaj Allianz The agreement is for Java developer to application support and enhancement of the web application which is nothing but IT related services. (xii) ING Vysya Bank Ltd. The scope of services mentioned at Col. 2 would show that the activities rendered by the appellant are various types of IT related services including maintenance. 22. It is pertinent to say that in the Order in Original, the original authority has discussed the agreements in regard to three clients only. Para 12 of Order in Original, contains the findings with regard to manpower recruitment or supply agency service. Only the facts with regard to GE Capital Corporation, ABN AMRO Bank, Societe Generale Global Solution Centre Pvt. Ltd. has been taken up for discussion by the original authority. In para 12.6, it is stated by the original authority that the contention of the appellant that all the staff / qualified personnel employed by them are on their pay rolls ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me was adjourned to 13.1.2021. On this day also during hearing as stated earlier, even though she put forward a contention that agreement of some of the clients would fall under MRSA she was not able to clarify or support her contention. In the written additional submissions, ld. AR has discussed the agreement entered with Barclays Bank. In fact, there is no mention of Barclays Bank under MRSA in Show Cause Notice. The agreement with Barclays Bank is in regard to other service and not MRSA. The ld. AR has not studied the facts seriously or sufficiently. Being rehearing as per direction of Hon'ble High Court, we cannot refrain from stating so. The department has issued Show Cause Notice after several correspondences with the appellant and after going through the documents. The adjudicating authority has also passed the order after perusing the agreements. 24. Be that as it may, the ld. Counsel for appellant has also raised an argument that the demand under MRSA cannot sustain for the period prior to 16.5.2008 when the transactions of the very same nature have been subjected to service tax under Information Technology Software Services after such services became taxable. It is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .10.2009, a further letter is issued by the department to appellant asking details with regard to maintenance or repair services, information technology software services etc. To this letter, the appellant has replied on 9.10.2009 giving the details as requested. On 14.10.2009, another letter is issued by the department to the appellant asking for further details. The appellant has replied on 18.11.2009 with necessary enclosures explaining their contentions. On 26.11.2009, a letter is issued by the department in respect of input service credit adjustment and also maintenance or repair service details. To this appellant replied on 30.11.2009. A further letter is issued on 22.12.2009. From the above correspondences between the parties, it is evident that the appellant was all along responding and cooperating with the department. The show cause notice is issued only on 23.4.2010. We do not find any evidence to support the allegation that the appellant has suppressed facts with intention to evade payment of service. The ld. counsel for appellant has relied on the decision of Hon'ble Supreme Court in Continental Foundation Jt. Venture Vs. CCE 2007 (216) ELT 177 (SC). In para 11 and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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