2018 (5) TMI 1464 - AT - Service Tax

Appellant not liable for service tax under Manpower Recruitment category. Legal precedents crucial. Appeal allowed.

M/s Adani Enterprise Ltd Versus C.S.T. & S. T- Ahmedabad

The Tribunal held that the appellant was not liable to pay service tax under the Manpower Recruitment or Supply Service Agency category. Relying on ... Manpower Recruitment or Supply Agency service - appellant was providing staff to their different related companies and was recovering certain amount of salary from them - Held that: - the issue is no longer res-integra and is squarely covered by the decision of Hon’ble High Court of Gujarat. In the case of Commissioner of Service Tax Vs. Arvind Mills Limited [2014 (4) TMI 132 - GUJARAT HIGH COURT], where it was held that The definition though provides that Manpower Recruitment Supply Agency means any commercial concern engaged in providing any services directly or indirectly in any manner for recruitment or supply of manpower temporarily or otherwise to a client, in the present case, the respondent cannot be said to be a commercial concern engaged in providing such specified services to a client - demand do not sustain - appeal allowed - decided in favor of appellant. Issues:Whether the appellant is liable to pay service tax under the category of Manpower Recruitment or Supply Service Agency on receipt of reimbursement of salary expenses from their group companies/sister concern companies.Analysis:The case involved the appellant providing various services and deputing staff to their related companies. The Revenue alleged that the appellant was operating as a 'Manpower Recruitment or Supply Agency' and issued a show cause notice resulting in a demand of Rs. 12,81,049/-, interest, and a penalty of Rs. 26,13,340/-. The Commissioner (Appeals) upheld the decision, leading to the appeal before the Tribunal.The appellant contended that they were not a commercial concern engaged in Manpower Recruitment Service but were involved in different activities, deputing staff to subsidiary/group companies for a limited period. The appellant relied on judicial pronouncements, specifically citing the judgment of the Hon'ble Gujarat High Court in the case of Commissioner of Service Tax Vs. Arvind Mills Limited and the subsequent Tribunal decision in Spirax Marshall P. Limited Vs. Commissioner of Central Excise, Pune-I.After considering the arguments from both sides and examining the records, the Tribunal focused on whether the appellant was liable to pay service tax under the Manpower Recruitment or Supply Service Agency category. The Tribunal found that the issue was settled by the Hon'ble High Court of Gujarat in the case of Commissioner of Service Tax Vs. Arvind Mills Limited. The High Court's decision emphasized that for an entity to be considered a Manpower Recruitment Supply Agency, it must be a commercial concern engaged in providing such services to a client, which was not the case with the appellant.The Tribunal, following the judicial pronouncements and the precedents set by the High Court and the Supreme Court, held that the order of the Commissioner (Appeals) was not sustainable and set it aside. Consequently, the appeal was allowed, and the appellant's liability to pay service tax under the Manpower Recruitment or Supply Service Agency category was dismissed.In conclusion, the Tribunal's decision was based on the interpretation of the definition of Manpower Recruitment Supply Agency and the specific circumstances of the case, ultimately ruling in favor of the appellant based on established legal principles and precedents.