Reverse-charge liability for manpower supply service made tax demand on the provider unsustainable.

Labour supply was treated as manpower recruitment or supply agency service, and the applicable reverse-charge notifications placed the service tax burden entirely on the recipient for the period in dispute. As the demand was raised against the provider instead of the person liable under the notifications, the demand was held unsustainable and set aside.

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Issues: Whether the service tax demand raised on labour supply charges was sustainable when the service was classifiable as manpower recruitment or supply agency service and the tax liability under the applicable notifications lay on the recipient of service.

Analysis: The labour supplied by the appellant was found to answer the description of manpower recruitment or supply agency service. Under Notification No. 30/2012-S.T. dated 20.06.2012, as amended by Notification No. 07/2015-S.T. dated 01.03.2015, the service tax burden for such service stood shifted to the recipient, and for the period in dispute the liability was 100% on the recipient. The demand was therefore raised against the wrong person and was not legally sustainable.

Conclusion: The demand of service tax from the appellant was not sustainable and was set aside.

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