2016 (3) TMI 904 - AT - Service Tax

Tribunal grants waiver in service tax stay petition for Manpower Recruitment agency.

Northern Operating Systems Pvt Ltd. Versus Commissioner Of Central Excise, Service Tax And Customs Bangalore (adjudication)

The Tribunal ruled in favor of the appellant in a stay petition seeking waiver of predeposit of service tax liabilities under Manpower Recruitment or ... Waiver of pre-deposit - Short payment of Service tax - Rendered services of manpower recruitment or supply agency by virtue of reverse charge mechanism - Whether the amount paid by the appellant to foreign companies towards social security services and on behalf of the employees who are seconded to India for functioning as the employees of the appellant is covered under manpower recruitment or supply agency services or not - Held that:- by relying on the judgment of Hon'ble High Court of Allahabad in the case of Computer Sciences Corporation India Pvt Ltd Vs CST Noida [2014 (4) TMI 252 - CESTAT NEW DELHI], in a situation like this, services will not fall under the category of manpower recruitment or supply agency services. Therefore, the appellant has made out prima facie strong case for wavier of the service tax liability under this category. - Matter disposed of Issues: Stay petition for waiver of predeposit of service tax, interest, penalties, and short payment of service tax.Analysis:1. Service tax liability under Manpower Recruitment or supply agency service:The appellant filed a stay petition seeking waiver of predeposit of various amounts, including service tax under Manpower Recruitment or supply agency service. The adjudicating authority confirmed the amounts as service tax liability based on the appellant's activities of paying salaries to expatriated persons deputed in India. The Tribunal noted that a similar issue was previously decided in a case where it was held that amounts paid as salary, on repatriation, would not fall under the category of manpower recruitment or supply agency services. The Tribunal found in favor of the appellant, considering the judgment of the High Court, and held that the appellant had a strong case for waiver of service tax liability.2. Short payment of service tax for the period 2008-09 and 2010-11:The appellant claimed to have already discharged a portion of the confirmed short payment of service tax. However, the Tribunal found that the appellant had only paid a differential amount of service tax under reverse charge mechanism and interest, not the entire confirmed amount. The Tribunal directed the appellant to deposit a specific amount within a specified period and allowed the waiver of predeposit for the remaining balance, pending compliance.3. Penalties and interest under the Finance Act:The Tribunal considered the submissions from both sides regarding penalties imposed for late filing of returns and under Section 78 of the Finance Act. The decision on penalties was intertwined with the determination of service tax liability. The Tribunal's ruling on the service tax liability influenced the outcome of the penalties and interest, with the waiver of predeposit being allowed for the remaining amounts after specific compliance requirements were met.In conclusion, the Tribunal's judgment in the stay petition addressed various issues related to service tax liability, short payment, penalties, and interest under the Finance Act. The decision highlighted the importance of legal precedents, factual distinctions, and compliance requirements in determining the appellant's liability and the subsequent waiver of predeposit for certain amounts.