Tribunal ruling: Service tax liability set aside for deputation, upheld for Business Auxiliary Service

The Tribunal set aside the demand for service tax liability under 'Manpower Recruitment and Supply Agency Services', citing that the deputation of employees to group companies did not fall under this category. The liability under 'Business Auxiliary Service' was upheld, with penalties imposed for inadvertent errors being rejected. The penalties were ultimately set aside due to the rejection of the main demand, resulting in the appeal being disposed of accordingly.

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Issues:
1. Service tax liability under the category of 'Manpower Recruitment and Supply Agency Services'.
2. Service tax liability under the category of 'Business Auxiliary Service'.
3. Imposition of penalties.

Analysis:
Issue 1: The appellant, registered under various taxable categories, was deputing employees to group companies and receiving reimbursement of their salaries. Revenue authorities alleged the reimbursement fell under 'Manpower Recruitment and Supply Agency Services', leading to a show cause notice. The appellant contested, citing a High Court judgment. The Tribunal found the deputation did not amount to 'Manpower Recruitment and Supply Agency Services' based on facts and the High Court precedent, setting aside the demand.

Issue 2: An amount under 'Business Auxiliary Service' was unpaid due to an inadvertent error, which the appellant later paid along with interest. The Tribunal upheld this liability but rejected the penalty imposed on this amount, considering it an inadvertent error.

Issue 3: The penalties imposed were set aside due to the rejection of the major demand under 'Manpower Recruitment and Supply Agency Services'. The Tribunal disposed of the appeal accordingly, emphasizing the setting aside of penalties and rejecting the demand under 'Manpower Recruitment and Supply Agency Services' while upholding the liability under 'Business Auxiliary Service'.

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