Tribunal favors appellant in service tax dispute, ruling activities as IT services, not manpower supply.

The tribunal ruled in favor of the appellant, holding that their activities were more aligned with providing "information technology software service" rather than "supply of manpower." They found no justification for the denial of CENVAT credit or the demand of service tax under "manpower supply service" for activities outside India. The tribunal waived the pre-deposit of the dues and stayed the recovery until the appeals were disposed of, ultimately allowing both stay applications.

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Issues:
1. Demand under "Manpower Recruitment & Supply Agency Service" and denial of credit under CENVAT Credit Rules, 2004
2. Demand under "Manpower Supply Service" for reimbursable expenses
3. Interest and penalties under various Sections
4. Time-bar for demand raised
5. Requirement of separate Returns for CENVAT credit

Analysis:
1. The appeal involved a total demand of around Rs.3.65 crores on two counts. One was a demand of Rs.1.82 crores under "Manpower Recruitment & Supply Agency Service," and the other was a denial of credit amounting to Rs.1.79 crores under CENVAT Credit Rules, 2004. The appellant argued that their activities were related to the development of software, not "supply of manpower," citing a previous stay order in a similar case. They also contended that the demand raised from April 2004 to September 2007 was time-barred and that separate Returns for CENVAT credit were not required as the necessary details were already provided in their ST-3 Returns as a service provider.

2. Another issue was a demand of about Rs. 60 lakhs under "Manpower Supply Service" for reimbursable expenses related to employees deputed to the USA. The appellant argued that since the activities took place outside India, the liability for service tax did not arise. The tribunal held that the activities may not be considered as "supply of manpower" but as "information technology software service," granting waiver of pre-deposit based on a previous stay order. They also ruled that there was no requirement for separate Returns under Rule 9(9) of the CENVAT Credit Rules, 2004, for which pre-deposit was not warranted.

3. The tribunal considered the submissions from both sides and held that the appellant's activities were more aligned with providing "information technology software service" rather than "supply of manpower." They also found no justification for the denial of CENVAT credit or the demand of service tax under "manpower supply service" for activities outside India. Consequently, they waived the pre-deposit of the dues and stayed the recovery until the appeals were disposed of, ultimately allowing both stay applications.

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