Substance over form in employee secondment made the arrangement taxable as manpower supply service, defeating the refund claim.

Deputation of employees to a subsidiary was treated as manpower recruitment or supply agency service under the pre-2012 definition, because the arrangement showed secondment, operational control with the subsidiary, possible return of employees, and recovery of salary and allowances with markup. Applying substance over form, the transfer was not a mere reimbursement and amounted to taxable manpower supply for consideration. As the service tax was correctly paid, the refund claim failed. The objections based on recovery of tax from the subsidiary and the alternative claim for refund of interest did not change the result.

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Issues: Whether the deputation of employees to the subsidiary company constituted manpower recruitment or supply agency service and business support service, so as to sustain the service tax payment and defeat the refund claim.

Analysis: The dispute related to the period before the 2012 amendment, and the relevant pre-amendment definition had to be applied. On the facts found, the employees were sent on secondment to the subsidiary, the subsidiary exercised operational control, the employees could return to the appellant, and the appellant recovered salary and allowances with an additional markup. The arrangement was therefore covered by the settled principle that the true nature of the transaction is determined by substance over form. In that setting, the transfer of employees was not a mere reimbursement arrangement but involved manpower supply service for consideration. As the service tax was rightly paid, the refund claim could not succeed. The objection based on recovery of tax from the subsidiary and the alternate challenge to refund of interest also did not alter the result.

Conclusion: The deputation arrangement was taxable as manpower supply service, and no refund was payable to the appellant.

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