2020 (3) TMI 315 - AT - Service Tax

Appellant's Service Tax Appeal Dismissed for Manpower Recruitment Services

The Tribunal concluded that the services provided by the appellant were classified as 'Manpower Recruitment and Supply Agency Service'. The demand for ... Classification of services - agreement with M/s. WTI Advanced Technology Ltd. by which it was agreed that the appellants would offer the services of its selected employees to work on the projects identified and allocated by M/s. WTI to carry out such functions and project related activities as allocated by M/s. WTI from time to time - whether the activity would fall within the definition of “Manpower Recruitment and Supply Agency Service”? - HELD THAT:- The nature of the contract is for supply of manpower. The consideration is paid on the basis of man-hours. It can also be seen that the work is executed as per the guidance of M/s. WTI. Thus, for carrying out the development, maintenance, etc., of software, the persons so deployed by the appellant to M/s. WTI are under the control of M/s. WTI and they work under the guidance and supervision of M/s. WTI. Learned Counsel for the appellant has made much effort to contend that the services are ‘Information Technology Software Services’ and not ‘Manpower Recruitment and Supply Agency Services’. However, from the agreement entered by the appellant with M/s. WTI it is very much clear that activity falls within the four corners of Manpower Recruitment and Supply Agency Service. The demand is legal and proper - appeal dismissed - decided against appellant. Issues Involved:1. Classification of services provided by the appellant.2. Applicability of Service Tax under 'Manpower Recruitment and Supply Agency Service'.3. Validity of Show Cause Notice.4. Relevance of previous Tribunal decisions.Issue-wise Detailed Analysis:1. Classification of Services Provided by the Appellant:The appellants were registered for providing Commercial Training and Coaching Service, Business Support Service, etc. They entered into an agreement with M/s. WTI Advanced Technology Ltd. to offer services of selected employees for project-related activities. The Department viewed this activity as 'Manpower Recruitment and Supply Agency Service'. The appellant argued that the services provided were as CAD consultants involving customization of software, thus falling under 'Information Technology Software Service'.2. Applicability of Service Tax under 'Manpower Recruitment and Supply Agency Service':The Department issued a Show Cause Notice demanding Service Tax under 'Manpower Recruitment and Supply Agency Service' for the period from 01.04.2008 to 31.03.2009. The appellant contended that they paid Service Tax under 'Information Technology Software Service' from 16.05.2008 to 31.10.2009. The Tribunal examined the agreement clauses and concluded that the nature of the contract was for the supply of manpower, paid on a man-hour basis, and executed under the guidance and supervision of M/s. WTI. Hence, the service provided fell under 'Manpower Recruitment and Supply Agency Service'.3. Validity of Show Cause Notice:The appellant argued that the Show Cause Notice was not maintainable as it did not allege that the employees worked under the control of M/s. WTI, which is a requirement for 'Manpower Recruitment and Supply Agency Service'. However, the Tribunal found that the agreement indicated that the employees were indeed under the control and supervision of M/s. WTI, thus justifying the demand under the specified service category.4. Relevance of Previous Tribunal Decisions:The appellant contested the reliance on the decision in M/s. Future Focus Infotech India (P) Ltd. v. Commissioner of Service Tax, Chennai, arguing that the facts were not applicable to their case. The Tribunal, however, found the previous decision relevant, as it similarly involved the supply of skilled personnel to work under the supervision and control of another company. The Tribunal emphasized that the appellants were supplying manpower and not delivering software projects independently.Conclusion:The Tribunal concluded that the services provided by the appellant fell within the definition of 'Manpower Recruitment and Supply Agency Service' as per Section 65 (68) of the Finance Act, 1994. The demand for Service Tax was deemed legal and proper, and the appeal was dismissed.Operative Part of the Order:The appeal was dismissed, and the demand for Service Tax under 'Manpower Recruitment and Supply Agency Service' was upheld.