Tribunal rules service tax not applicable for export of services

The Tribunal ruled in favor of the appellant, stating that the service provided by the manpower recruitment agency qualifies as an export of service as both the service performance and recipient are located outside India. Therefore, the appellant was not liable to pay service tax. The Tribunal waived the requirement of pre-deposit and stayed the recovery of the demanded amount during the appeal process under the Finance Act, 1994.

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Issues involved: Service tax demand under the Finance Act, 1994 for manpower recruitment agency services and business auxiliary service.

Summary:

Issue 1: Service Tax Liability
The appellant's service tax demand of Rs. 62,86,329/- for the period 1-3-2003 to 31-3-2007 under manpower recruitment agency services and business auxiliary service was confirmed. The appellant contended that since their service receivers and recruited persons are located outside India, the service performance and recipient are also outside India, making it an export of service. The Tribunal acknowledged the appellant's argument, stating that the service qualifies as an export of service, and therefore, the appellant is not liable to pay service tax.

Decision:
The Tribunal waived the requirement of pre-deposit of the entire demand of service tax, interest, and penalties under the Finance Act, 1994. Recovery of the amount was stayed during the pendency of the appeal.

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