Appeal Partially Allowed, Service Tax Liability Confirmed for 2006-2007

The Tribunal partially allowed the appeal, confirming the service tax liability for 2006-2007. The appellant was found liable for service tax on manpower supply post 16/06/2005, with an exemption for the initial value of taxable services up to Rs. 4 lakhs for 2005-2006. The admitted liability for 2006-2007 was upheld, with interest imposed for delayed payment. Penalties were set aside, and the Adjudicating Authority was tasked with verifying taxable service calculations, with any discrepancies to be paid by the appellant.

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Issues:
Service tax liability for the period 2004-2007 on supply of manpower to Bikaner University.

Analysis:
The appeal before the Appellate Tribunal CESTAT New Delhi was against the order-in-appeal passed by the Commissioner (Appeals), Jaipur regarding the service tax liability of the appellant, a labor contractor supplying manpower to Bikaner University. The dispute revolved around the non-payment of service tax on the consideration received for the services provided during the period 2004-2007. The Original Authority confirmed the demand for service tax, which was challenged before the Commissioner (Appeals) and subsequently brought before the Tribunal.

The appellant contended that prior to 16/06/2005, only manpower recruitment and not supply was taxable under the definition of manpower service. They argued that the amendment in the definition w.e.f. 16/06/2005 brought supply of manpower within the purview of taxable services. The appellant claimed that the demand for 2004-2005 was not sustainable, while for 2005-2006, they were eligible for the small scale exemption of Rs. 4 lakhs. The tax liability for 2006-2007 was admitted by the appellant and not challenged.

The Tribunal considered the amendments in the definition of manpower service and the clarification provided by CBEC regarding the inclusion of manpower supply agencies post the amendment. It was observed that before 16/06/2005, the supply of manpower by the appellant could not be charged to service tax. However, for 2005-2006, the appellant was liable for service tax on the consideration received post 16/06/2005, with the benefit of exemption for the initial value of taxable services up to Rs. 4 lakhs.

The appellant's admitted liability for 2006-2007 was confirmed by the Tribunal, along with the requirement to pay interest for delayed payment of service tax. The penalties imposed by the authorities below were set aside under Section 80 of the Finance Act, 1994. The original Adjudicating Authority was directed to verify the calculations of taxable service claimed and paid by the appellant, with any differential service tax arising from the verification to be paid by the appellant.

In conclusion, the appeal was partly allowed by the Tribunal, confirming the service tax liability for 2006-2007 while providing relief from penalties and directing further verification of taxable service calculations.

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