EPF and ESI contributions excluded from manpower supply value at the interim stage, with stay of recovery granted.

EPF and ESI contributions paid by the principal employer were treated as outside the taxable value of manpower supply service because the liability to make those payments rested with the principal employer and not as consideration received by the service provider. The appellants' charging of service tax on the gross manpower supply amount did not justify adding those statutory contributions to the assessable value at the interim stage. On that basis, a strong prima facie case was found for interim relief, and waiver of dues with stay of recovery was granted pending the appeals.

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Issues: Whether the amount contributed by the principal employer towards EPF and ESI could be included in the taxable value for manpower supply service, and whether the appellants had made out a prima facie case for waiver of dues and stay of recovery.

Analysis: The appellants were charging service tax on the gross amount received for manpower supply. The Revenue sought to include the EPF and ESI contributions made by the principal employer in the taxable value. The Court found that the liability to pay EPF and ESI rested on the principal employer, who was discharging that obligation, and that such amounts did not form part of the consideration received by the appellants for providing manpower supply services. On that basis, the appellants established a strong prima facie case for interim relief.

Conclusion: The EPF and ESI contributions were not to be treated as consideration for manpower supply service at the interim stage, and waiver of dues with stay of recovery was granted during pendency of the appeals.

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