2014 (12) TMI 1094 - AT - Service Tax

Appellate Tribunal upholds service tax demand for service receiver in manpower supply case.

DELL INTERNATIONAL SERVICES INDIA P. LTD. Versus CST., BANGALORE

The Appellate Tribunal upheld a service tax demand of &8377; 59,87,946 against the appellant as a service receiver for employees deputed by a foreign ... Waiver of pre deposit - Manpower Supply Services - employees deputed by Dell International from abroad - Held that:- Assignment letter has been issued by foreign company abroad and not by Dell International Services India Pvt. Ltd. Moreover, the agreement itself in paragraph relating ‘Compensation and Benefits’, the agreement says during the assignment, salary continues to be paid from the home location. Promotional increase, merits salary grade changes, etc. must follow the guidelines of the home location. The assignment letter issued by the company abroad and salary should be paid at home location would show prima facie that the foreign company has provided the ‘manpower supply service’. There is no exclusive relationship of employer-employee was maintained not only in Indian company but foreign company. The Tribunal finally took the view that stay has been granted on the ground of limitation. In this case, the entire demand is within the normal period. Therefore, revenue neutrality may not be appropriate for unconditional waiver of pre-deposit and stay against recovery. - Entire amount of service tax directed to be deposited - interest and penalty stayed - Stay granted partly. Issues:Service tax liability under 'Manpower Supply Services' for employees deputed by a foreign company.Analysis:The Appellate Tribunal confirmed a service tax demand of &8377; 59,87,946 against the appellant as a service receiver for employees deputed by a foreign company. The advocate argued that the employees were actually the foreign company's own employees, not a service, citing a previous case where the Tribunal granted waiver of pre-deposit and stay against recovery. The Tribunal examined the sample agreement and noted that the assignment letter was issued by the foreign company abroad, indicating that the foreign company provided 'manpower supply service.' The agreement stated that salaries were paid from the employees' home location, showing a connection to the foreign company. The Tribunal's previous stay order also highlighted that salaries were paid by the foreign companies, and there was no exclusive employer-employee relationship maintained by either the Indian or foreign company. While the previous stay was granted on limitation grounds, the current demand fell within the normal period, leading to a directive for the appellant to deposit the entire demanded amount within six weeks. Compliance would result in a waiver of pre-deposit for the balance dues and a stay against recovery during the appeal's pendency.