Appeal allowed for service tax liability on technical testing & manpower supply services

The appeal was allowed, and the case was remanded for fresh consideration in light of relevant judgments regarding the liability of service tax on technical testing and manpower supply services. The Tribunal directed the adjudicating authority to reassess the case, considering the precedents cited by the appellants and allowing them a fair opportunity to present their defense. The appellants were granted a reasonable chance to be heard, and the order was pronounced on 6.5.2010 by the Technical Member and Vice-President of the Tribunal.

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Issues:
1. Liability of service tax on technical testing and analysis services.
2. Liability of service tax on manpower supply services.
3. Applicability of previous tribunal decisions.
4. Consideration of time bar and other pleas raised by the assessees.

Analysis:
1. The appellants were involved in testing software functionality and performance for clients. The excise authorities deemed the testing service liable to service tax from 1.7.2003 onwards. Additionally, supplying skilled manpower for software testing became taxable from 16.6.2005. A show-cause notice demanded service tax for both services totaling Rs.1,05,35,102 along with interest and penalties. The Commissioner upheld the demand and imposed various penalties under different sections of the Finance Act, 1994.

2. The appellants cited the Tribunal's decision in Stag Software Pvt. Ltd. Vs Commissioner of Service Tax, Bangalore [2008 (10) STR 329], which held that software testing was not covered under technical inspection services. They also relied on Cognizant Tech. Solutions (I) Pvt. Ltd. Vs Commissioner, LTU Chennai [2010 (18) STR 326] for the manpower supply service issue. The Tribunal noted that both these decisions were delivered after the impugned order. Therefore, the case was remitted for fresh consideration in light of these judgments, including the plea of time bar and other defenses raised by the appellants.

3. The Tribunal emphasized the need to consider the applicability of the Stag Software and Cognizant Technology decisions, which were delivered after the initial order. The adjudicating authority was directed to reassess the case, taking into account these precedents and allowing the appellants a fair opportunity to present their defense.

4. Ultimately, the appeal was allowed by remand for fresh orders to be passed after considering the relevant judgments and giving the appellants a reasonable chance to be heard. The operative part of the order was pronounced on 6.5.2010 by the Technical Member and Vice-President of the Tribunal.

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