Deputation of employees on salary reimbursement is not manpower supply service when control stays with the parent company.

Deputation of employees by group companies against reimbursement of actual salary cost does not constitute manpower recruitment or supply agency service when control and supervision remain with the deputing entity and no profit element arises. The arrangement is treated as an internal group deployment for the benefit of related companies, not a commercial supply of manpower to a client. On identical facts, binding precedent had already held that such deputation falls outside the taxable service category, so service tax is not leviable on the reimbursement amounts.

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Issues: Whether deputation of employees by group companies against reimbursement of salary cost falls within the scope of manpower recruitment or supply agency service and attracts service tax.

Analysis: The activity in question consisted of deputing employees to group companies for limited work, while control and supervision remained with the appellant companies. The amounts recovered were only the actual salary-related costs, with no element of profit or commercial gain. The arrangement was for the internal benefit of the group companies and did not create a commercial agency relationship with a client. The issue was already settled on identical facts by binding judicial precedent, holding that such deputation does not amount to manpower recruitment or supply of manpower services.

Conclusion: The demand of service tax under manpower recruitment or supply agency service was unsustainable and was set aside in favour of the assessee.

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