TaxTMI 
TaxTMI 
2018 (4) TMI 1041
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....ered into from time to time, for provision of software services at the client's premises. Department took the view that appellants are only supplying man power to TCS in Special Economic Zones and other similar organizations as per the requirements and that the appellants are not engaged in development of any software on their own but are only providing employees to TCS and other organizations. Department issued various show cause notices proposing that activities of the appellants are liable to be classified under "Man Power Supply or Recruitment Agency w.e.f. 16.6.2005 and also proposing demand of service tax liability under that category along with interest and for imposition of penalties. The details of said show cause notices are tabulated below :- S.No. SCN No. Period O-I-O (Impugned order) ST Amount Penalties 1. 250/2008 dt. 26.09.2008 October 2007 to March 2008 2/2010 dt. 26.04.2010 83,38,465 Rs.200 per day/2% pm (Sec.76) 2. 233/2009 dt. 14.05.2009 April 2008 to September 2008 52,05,985 Rs.200 per day/2% pm (Sec.76) 3. 211/2009 dt. 22.04.2009 April 2007 to March 2008 10,52,160 Rs.200 per day/2% pm (Sec.76) Rs. 10,52,160 (Sec.78) These show cause notic....
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....s to various SEZ units of TCS also and claimed exemption as per Notification No.4/2004-ST. They had submitted all these details of services provided to SEZ units to the Commissioner. Ld. Advocate points out that as per Sections 26 & 51 of the SEZ Act, 2005 and Rule 10 of the SEZ Rules, 2006, the SEZ unit is entitled to procure services without payment of service tax and provisions of SEZ Act shall have overriding effect over the provisions of any other law. However, Commissioner has not accepted their submission only on the ground that they have not provided any invoices raised for providing services to SEZ units and also that certificates in some cases issued by Development Commissioner have not been produced. iv) Demand on TDS component for post-16.05.2008 is not sustainable as the said services have been provided only to SEZ units. v) The demand from April 2007 to September 2007 is hit by limitation as the issue has been seized by the department in previous notices. The internal audit party did not raise any objection on nonpayment of service tax on TDS component. 4. On the other hand, Ld. A.R Shri K.P. Muralidharan supports the impugned order. He submits that the Adjudicatin....
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....r that the appellants are working on any such project on their own. What has emerged clearly is that the appellants have deputed skilled personnel including computer engineers to work under the supervision and control of TCS and Infosys personnel in-charge of projects undertaken by TCS and Infosys. The appellants are getting paid in terms of the man hours for the persons deputed to work under the control and supervision of TCS and Infosys. 13. No doubt there are clauses relating to deliverables and quality of work in the contracts but these by themselves do not indicate that the appellants are providing information technology software services to TCS and Infosys. Any person or organization obtaining skilled personnel has to ensure that such men deliver work of standard quality. No one would employ a person who is not skilled enough and no one would pay for shoddy work even if done by a skilled man. The relevant clauses in the contract in this regard on which much emphasis was sought to be put by the learned senior counsel for the appellants have to be viewed in the light that TCS and Infosys are merely seeking to obtain personnel from the appellants with necessary skill who will w....
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....r and further appellant would provide "Global Clinical Data Services"/Clinical Programming and Writing (CPW) for various protocols. Based on these parameters as found from the agreement, it is seen that appellants therein were providing functional services to Pfizer relating to data management, bio-statics and reporting through the same man power which has been recruited, retained and trained; consequently these are in the nature of IT services as the same relates to data management. The relevant portion of the Tribunal decision in Cognizant case is reproduced for ready reference : "10. We find force in the contentions made by the appellants that the work force recruited and retained by the appellants are required to work under a project manager appointed by the appellants who has to act as single point of contact being responsible for overall management of the project. From the arguments advanced from both sides, it is clear that the learned special counsel for the Department is not disputing that in the second stage of the project, the appellants would be providing functional service to Pfizer. It is also not in dispute that such functional service relating to data management, b....
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....'s contention that the Tribunal has given contrasting decisions on same sets of facts in these cases. 6.5 We further find that the facts which had been addressed by the Tribunal in the appellant's own case are very much present in the present appeal also. Ld. Advocate has been at pains to take us to various contracts / agreements with TCS, Infosys etc. to contend that they were in fact engaged in information technology activities and not in merely supplying of man power. However, a close look of the very same agreements touched upon by the ld. Advocate lead us to contrary findings. For example, in the contract with TCS dt. 13.05.1997 at page 123 of the appeal book, it has been clearly mandated that trained staff of the appellant will be "exclusively used for TCS related work". So also, in the Business Associate Agreement dt. 1.7.2003, between the appellant and TCS, found in page 180 of the appeal book, a reference is made to "a pool of highly skilled and specialized Employees experienced in the development, enhancement, implementation and maintenance of software projects". It is also indicated therein that the appellant would be deputing its employees to TCS and TCS' client locati....
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.... an earlier period, in Final Order No.246-247/2010 dt. 03.03.2010 in Appeal Nos. S/173/2008 & ST/220/2009 as reported in 2010 (18) STR 308 (Tri.-Chennai). We are therefore of the considered opinion that the activities of the appellant will definitely fall only within the scope of "Man Power Supply or Recruitment Agency Service" as defined in Section 65 (105) (k) of the Finance Act, 1994. The appellants are therefore liable for discharging tax liability on the value of taxable services in respect of these services. 6.10 However, we find merit in the contention of the appellant in respect of services provided to SEZ units. As per the overriding effect of Section 26 & 51 of the SEZ Act 2005 read with Rule 10 of SEZ Rules 2005, they would be eligible for exemption from payment of service tax and also for the exemption extended in Notification No.4/2004-ST dt.31.03.2004. The adjudicating authority has not considered this claim of the appellant on the ground that sufficient documents have not been produced by the appellants. We consider it proper to remand this issue to consider the appellant's submissions in this regard. In such de novo adjudication, the authority concerned will exami....