Reverse charge on manpower supply not attracted where the provider was a private limited company; penalty also unsustainable.

Reverse charge service tax was not applicable where manpower supply was received from a private limited company, because the relevant notification covered only specified service providers such as individuals, HUFs, firms and AOPs. On the admitted facts, the appellant therefore fell outside the reverse charge net for the invoices in question. Penalty under sections 77 and 78 of the Finance Act was also held unsustainable, as any tax dues had been paid after the issue was pointed out by the Revenue and the conduct was treated as bona fide.

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Issues: Whether the appellant was liable to pay service tax under reverse charge on manpower supply received from a private limited company and whether penalty under sections 77 and 78 of the Finance Act was sustainable.

Analysis: The service provider was a limited company, whereas the reverse charge notification applied to specified categories of service providers such as individuals, HUFs, firms and AOPs. On the admitted facts, the appellant was not covered by the reverse charge liability for the relevant invoices. The penalty was also found unjustified because the tax, if any, had been paid after being pointed out by the Revenue and the conduct was treated as bona fide.

Conclusion: The appellant was not liable under reverse charge on the facts of the case, and the penalty under sections 77 and 78 was not sustainable.

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