TaxTMI 
TaxTMI 
2020 (12) TMI 1018
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.... learned Commissioner has dropped the proceedings of the SCN initiated by the Department for the subsequent period. Since the issue involved in all the three appeals is identical, hence all the three appeals are taken up together for discussion and disposal. First, we take up the assessee's appeals. The details of the three appeals are given herein below in tabular form: SL. NO . PARTICULARS 1. Period in dispute October 2006 - March 2011 April 2011 to March 2012 April 2012 to September 2014 2. Show Cause Notice Date 23.04.2012 19.10.2012 07.05.2014 & 26.11.2015 3. Order-in-Original No. 29/2013-14 dated 03.03.2014 No. 30/2013-14 dated 04.03.2014 No. 54-55/2016-17 dated 27.02.2017/16.06.2017 4. Demand of Service Tax i. Rs. 9,22,12,980/- under 'Manpower Recruitment or Supply Agency Service‟ ii. Demand of service tax amounting to Rs. 41,11,742/- as short payment of service tax for the period 2008-09....
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....rdance with the instructions and directions of Appellants. The employees would devote their entire time and work to the employer seconded to. c) The seconded employees would continue to be on the payroll of the group company (foreign entity) for the purpose of continuation of social security/retirement benefits, but for all practical purposes, Appellants shall be the employer. During the term of transfer or secondment the personnel shall be the employee of Appellants. Appellants issue an employment letter to the seconded personnel stipulating all the terms of the employment. d) The employees so seconded would receive their salary, bonus, social benefits, out of pocket expenses and other expenses from the group company. e) The group company shall raise a debit note on Appellants to recover the expenses of salary, bonus etc. and the Appellants shall reimburse the group company for all these expenses and there shall be no mark-up on such reimbursement. 2.1 Appellants issues Form 16 to the seconded employees. The employees also file income tax return in Form 24Q. Apart from this the employees also contribute to the provident f....
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....r, on secondment basis, would be the service recipient. iii. There are no exclusion clauses in the definition of manpower recruitment or supply agency, under Section 65(68) of the Finance Act, 1994, that the service provider should possess the status of certain specified person or organization, for the purpose of providing the taxable service of manpower, recruitment or supply agency as defined under Section 65(105)(k) of the Finance Act, 1994. iv. The idea behind secondment arrangement is that the secondee will remain employed by the original employer during the secondment, and will, following the termination of the secondment return to the seconder as a consequence of which the secondee does not become integrated into the host's organization. v. The obligation of the service provider would cease once employees were recruited and seconded. Hence the liability of service tax under Section 65 (105) (k) would be triggered at that event. vi. There is no exclusive clause in the Finance Act, 1994 that restricts the taxability of service of manpower recruitment or supply agency, when salaries were drawn by the ....
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....02.07.2014 and 31.12.2015, mainly harping that Service tax cannot be demanded as the services received from the foreign affiliates do not fall under Manpower Recruitment or Supply Agency Services for the period prior to Negative List. Further, for the period post Negative list, the definition of the term 'Service' as per Finance Act, specifically excludes the service provided by the employee to the employer. Therefore, the amount paid to the foreign entity as reimbursement of Salary of the seconded employees cannot be construed as consideration for supply of manpower services. 6. After following the due process, the learned Commissioner, Bangalore had vide Order-in-Original No. 54-55/2016-17 dated 27.02.2017/16.06.2017 dropped the proposals in the Show Cause Notice for the period April 2012 to March 2013 and April 2013 to September 2014, thereby setting aside demand of service tax of Rs. 4,36,75,590/- and Rs. 7,55,48,448/- respectively (Total Rs. 11,92,24,038/-). 7. Based on the perusal of the Secondment Agreement, the Ld. Commissioner in the Order-in-Original No. 54-55/2016-17 dated 27.02.2017/16.06.2017 has categorically made the following observatio....
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....sed the material on record and the decisions relied upon by the appellant. 10. Learned Counsel for the appellants submitted that the impugned order passed in assessee's appeal is not sustainable in law as the same has been passed without properly appreciating the facts and the law. He further submitted that the Department having passed a well-reasoned order (Orderin-Original No. 54-55/2016-17 dated 27.02.2017/16.06.2017) on merits cannot change the stand for a demand on the very same activity for the previous period and therefore the demand ought to be set aside on this ground alone. Learned Counsel also took us through the various clauses of the agreement between the appellant and its group companies which are basically for provision of certain specialized services and are not related to "supply of manpower" which is evident from various clauses in the Agreements. The employees seconded to India are required to report to the officers of the appellant and such employees are accountable for their performance to the appellant. He further submitted that an employeremployee relationship comes into existence between the appellant and the employees seconded by ....
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.... • Nissin Brake India Pvt. Ltd. Vs CCE, Jaipur-I, 2019 (24) GSTL 563 (Tri. Del.) maintained in 2019 (24) GSTL J171 (SC). • M/s Mikuni India Pvt. Ltd. Vs Commissioner of CGST, Rajasthan, 2019-TIOL-3188-CESTAT-DEL. • M/s India Yamaha Motor Pvt. Ltd. Vs CCE, New Delhi, 2019TIOL-3675-CESTAT-DEL. 10.1 He further submitted that in the present case there is no consideration charged by the foreign companies on the appellant for providing the supply of manpower as alleged by the Department and confirmed in the impugned order. He also submitted that the consideration under Section 67 of the Finance Act, 1994 is that amount which is (a) charged by the service provider on the service recipient, (b) for the provision of service provided to the service recipient and (c) should flow from the service recipient to the service provider but in the present case there is no consideration charged by the foreign company on the appellant for providing the supply of manpower as alleged by the Department and confirmed by the impugned order. He also submitted that even the Commissioner in Para 5.16(c) of his order records that "I find from Form-15 C....
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....ommissioner has at Para 6.3(g) of the impugned order held that the appellants are entitled for the adjustment of service tax of Rs. 31,39,745/- against the short payment of Rs. 41,11,742/-. Learned Counsel also submitted that when the appellants are not liable to pay service tax, the question of payment of interest does not arise. 11. On the other hand, learned AR reiterated the findings of the impugned order in assessee's appeals and in the Department's appeal, learned AR submitted that the activity of providing skilled manpower on secondment basis, which works under the supervision and control of the appellant for a fixed period of time on temporary basis, to the appellant, falls in the domain of the manpower recruitment or supply agency service within the meaning of Section 65(68) read with Section 65(105)(k) of the Finance Act, 1994. He further submitted that the overseas group companies would be the service provider and the appellant, who receives the skilled manpower, on secondment basis, would be the service recipient and there is no exclusive clause in the definition of manpower recruitment or supply agency under Section 65(68) of the Finance Act, 1994 ....
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.... the nomenclature bases classification of service tax was done away with and 'service' was specifically defined under Section 65B (44) of the Finance Act, 1994. Clause 44 of Section 65B read as: (44) "service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include- (a) an activity which constitutes merely,- (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution; or (iii) a transaction in money or actionable claim; (b) a provision of service by an employee to the employer in the course of or in relation to his employment; (c) fees taken in any Court or tribunal established under any law for the time being in force. 12.3 Further, after examining the various definitions cited supra, we find that in order to classify any service under the manpower recruitment or supply agency service the following conditions ne....
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....der the taxable service of manpower recruitment or supply agency service as defined under the Finance Act, 1994. We also find that there is no service provider-recipient relationship in the present case, as required by Section 65(105)(k). This issue is no more res integra and has been settled by various decisions of the Tribunals and the High Courts and upheld by the Hon'ble Apex Court. We may refer to few of the decisions in the case of Honeywell Technology Solutions Pvt. Ltd. Vs CST, Bangalore, 2020-TIOL-1277-CESTAT-BANG wherein recently this Tribunal based on same set of facts set aside the demand in as much as there was a distinct employee-employer relationship between the seconded employee and the assessee. We also hold that method of disbursement of salary cannot determine the nature of the transaction and this issue was considered in the case of M/s. Volkswagen India Pvt. Ltd. v. CCE, Pune-I reported in 2014 (34) S.T.R. 135 (Tri. - Mumbai) which has been upheld by the Hon'ble Apex Court in the case of Commissioner Vs Volkswagen India (Pvt.) Ltd. - 2016 (42) S.T.R. J145 (S.C.). We also find that in the case of Computer Sciences Corporation India Pvt. L....