Service tax demand on company providing employees to subsidiary set aside. Control over employees key.

The Tribunal set aside the demand for service tax on the appellant, a company providing employees to its subsidiary, under the category of Manpower Recruitment & Supply Agency Service. Relying on precedent, the Tribunal found that the appellant's control over the employees and lack of agency-client relationship with the subsidiary did not constitute a service taxable under the mentioned category. The judgment favored the appellant, allowing the appeal with consequential relief.

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Issues:
- Demand of service tax on 'Manpower Recruitment & Supply Agency Service'

Analysis:
The appellant challenged the demand of service tax on the service provided by them, arguing that they had appointed employees in their subsidiary company and were not liable to pay service tax under the category of Manpower Recruitment & Supply Agency Service. The appellant relied on the judgment in the case of Commissioner of Service Tax Vs. Arvind Mills Ltd. The Revenue, represented by the learned AR, reiterated the findings in the impugned order.

Upon hearing both sides, the Tribunal examined the records and found that the appellant had indeed employed individuals in their subsidiary unit, leading to the demand raised under the category of Manpower Recruitment & Supply Agency Service. The Tribunal referred to the judgment in the case of Aravind Mills Ltd., which highlighted that the deputation of staff to subsidiaries did not constitute a commercial concern engaged in providing recruitment or supply of manpower services to a client. It was emphasized that the control and supervision of the employees remained with the appellant, and there was no agency-client relationship with the subsidiary companies.

Based on the facts and the precedent set by the Aravind Mills Ltd. case, the Tribunal concluded that the demand for service tax was not sustainable and needed to be set aside. The judgment was in favor of the appellant, and the appeal was allowed with any consequential relief. The operative portion of the order was pronounced in open court.

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