Tribunal Overturns Rs. 7.71 Crore Service Tax Demand Due to Time-Barred Notice; Appeal Successfully Allowed.

The Tribunal set aside the Service Tax demand of Rs. 7,71,24,785/- against the Appellant, finding the demand time-barred. The show-cause notice, issued on 16.10.2015, exceeded the statutory limitation period, rendering the demand unsustainable. The Tribunal ruled that the extended period invocation was impermissible, allowing the Appellant's appeal.

---

---

Issues involved: Confirmation of Service Tax demand on secondment of employees to foreign counterpart under "Manpower Supply Service" and the validity of the show-cause notice in relation to the period of limitation.

Issue 1: Confirmation of Service Tax demand on secondment of employees

The Appellant challenged the confirmation of a Service Tax demand of Rs. 7,71,24,785/- along with interest and equal penalty on secondment of employees to its associated Foreign Counterpart in Germany under the heading "Manpower Supply Service."

The Appellant, engaged in providing various taxable services, had employees deputed to its foreign counterpart in Germany. The demand was raised based on the assertion that this arrangement amounted to manpower supply service on secondment. The show-cause notice issued for the financial years 2010-11 to 2013-14 alleged suppression of facts regarding non-payment of Service Tax.

After hearing submissions from both sides, it was acknowledged that the secondment of employees by the overseas entity for the completion of the Assessee's job constituted manpower supply. The demand was deemed sustainable, but the invocation of the extended period was found impermissible. The show-cause notice issued on 16.10.2015, beyond the normal 18-month period for making demands, was considered not in conformity with the law, leading to the requirement for its quashing before adjudication.

Issue 2: Validity of the show-cause notice in relation to the period of limitation

The Appellant contended that the entire demand was barred by limitation as the proceedings deviated from the statutory provision. The last date of payment was noted to be on 28.05.2013, with the return filed for the period ending on 25.10.2013. Citing Section 73(6)(i)(a), which determines the relevant date for the limitation period, it was argued that the demand was time-barred, ending on 25.01.2015.

The Tribunal agreed with the Appellant's submission, ruling that the appeal was hopelessly barred by the period of limitation. Any deviation from the statutory provisions was deemed impermissible, leading to the setting aside of the order confirming the Service Tax demand.

Conclusion:
The Appellant's appeal was allowed, and the order confirming the Service Tax demand was set aside due to non-conformity with the law and being time-barred.

---