Internal HUF services are not taxable manpower supply services when no separate client relationship exists.

Services rendered by one constituent unit of a Hindu Undivided Family to other constituent units of the same HUF were treated as internal arrangements, not taxable services supplied to a client. The charging basis for manpower recruitment or supply agency service requires a provider-client relationship, and that requirement was not met where the transaction remained within the same legal entity. Debit notes were viewed only as internal accounting entries and not as evidence of an independent taxable service relationship. On that reasoning, service tax could not be levied on services effectively rendered to oneself, and the demand was unsustainable.

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Issues: Whether services rendered by one constituent unit of a Hindu Undivided Family to other constituent units of the same HUF amount to taxable services provided to a client so as to attract service tax under the category of manpower recruitment or supply agency service.

Analysis: The disputed services were rendered within the same HUF structure, and the record showed that the service tax registration itself recognized the HUF and its constituent units. The basis of levy under the relevant charging provisions required service to a client by a manpower recruitment or supply agency, but the transaction here was between constituent units of the same legal entity. The issue of debit notes was treated as an internal accounting arrangement and not as proof of a taxable provider-client relationship. The reasoning adopted in the precedent relied upon by the Tribunal was applied to hold that service rendered to oneself does not create a taxable service relationship.

Conclusion: The services rendered to the other constituent units of the HUF were not taxable as services provided to a client, and the demand could not be sustained.

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