TaxTMI 
TaxTMI 
2021 (2) TMI 1093
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....ed to the interest of the Revenue, in the absence of discussing the Order dt.04.08.2020 in C.M.A.No.655 of 2020 relevant facts, and giving reasons, for arriving at a particular conclusion. We are restraining ourselves from expressing anything further on the tenor of the order passed by the learned Members of the Tribunal in the present case. 8. We hope and expect that the learned Members, and even other Members, who deal with the appeals from now onwards, in such Revenue matters, should understand the letter and spirit of these observations of the High Court. 9. We accordingly set aside the said order of the learned Tribunal on the said issue no.4, regarding taxability of manpower services and application of extended limitation in the present case and restore the appeal back to the learned Tribunal, with a request to hear the appeal de novo on the said issue and decide the same as expeditiously as possible. We are not in a position to answer the questions raised by the Revenue in the present appeal at this stage, for the aforesaid reasons. 10. The appeal is accordingly disposed of, without any order as to costs." 2. Issue N....
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.... case of Indian National Shipowners Association - 2011 (21) STR 3 (SC) and argued that when a specific new service is introduced without carving out any scope from the existing service category, such services can be liable to service tax only from the date of introduction of such new service. Similar view was taken in the case of Commissioner of Vs. IBM India Pvt. Ltd. - 2010 (18) STR J137 (SC). In this case, the Apex Court upheld the Tribunal's finding that ERP management services were classifiable under Information Technology Software Services with effect from 16.5.2008 and therefore could not be taxed under Management Consultancy Services for the period prior to 16.5.2008. The case of the department that service tax is liable on the same activity under MRSA prior to 16.5.2008 will not survive because the same transaction is accepted by the department to be Information Technology Software Services for the period after 16.5.2008. 5. Moreover, the services are predominantly provided by the appellant to companies who are not in the field of IT or software development. This will go to show that the appellant was providing Information Technology Software Services to these....
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.... appellant was for IT related services only. It is admitted that the appellant has deputed its employees to client locations for carrying out specific task as required by the client. However, the appellant retains direct control over its employees who work on specific client projects at the client locations. From a fair perusal of the contract, it is beyond doubt that the characteristics of the transaction are software services and the personnel are only resources deputed for providing the said software services. 9. He pointed out that in the Show Cause Notice as well as Order in Original, the department has recorded the transactions under dispute as being various IT related services only. In the Order in Original, the adjudicating authority has discussed only three contracts before misconstruing the obligations emanating out of these contracts. The adjudicating authority has wrongly relied upon the decision of the Tribunal in M/s. Future Focus Infotech Pvt. Ltd. The decision in M/s. Future Focus Infotech Pvt. Ltd. and the entire line of decisions following M/s. Future Focus Infotech Pvt. Ltd. are distinguishable on facts from the appellant's contracts. The workforce allocat....
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....invocation of extended period. The department having failed to establish such act of suppression with intent to evade payment of service tax, the extended period is not invocable in the present case. 12. This very same issue of MRSA came to be considered by the Tribunal on 3.3.2010 in two different matters in Future Focus Infotech and Cognizant Tech Solutions. After considering the factual matrices in each appeal and the applicable provisions, the Tribunal upheld the demand in Future Focus Infotech India Pvt. Ltd. (supra 2010) while the Tribunal set aside the demand in Cognizant Tech Solutions (supra 2010). Since there was a very narrow distinction between the facts in these cases, the same was discussed by the Tribunal in Coromandel Infotech India ltd. Vs. Commissioner - 2019 (1) TMI 323 - CESTAT Chennai. The Tribunal set aside the demand in Coromandel Infotech for the extended period of limitation on a finding that the issue was interpretational. In various cases, it has been held that when the issue involves interpretation of application of legal provisions and applicability of facts, the invocation of extended period cannot sustain. He further stated that the decision in....
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....ime to submit the rest of documents and issue may be reheard again. 14. Heard both sides and perused records carefully. 15. Before we proceed, it would be helpful to notice the definition of Manpower Recruitment Supply Agency (MRSA) and services as it stood during the relevant period: Section 65(68) of Finance Act, 1994 "Manpower recruitment or supply agency" means any [person] engaged in providing any service, directly or indirectly, in any manner for recruitment or supply of manpower, temporarily or otherwise, [to any other person]" Section 65(105)(k) of Finance Act, 1994 "To any person, by a manpower recruitment or supply agency in relation to the recruitment or supply of manpower, temporarily or otherwise, in any manner Explanation - for the removal of doubts, it is hereby declared that for the purposes of this sub-clause, recruitment or supply of manpower includes services in relation to pre-recruitment screening, verification of the credentials and antecedents of the candidate and authenticity of documents submitted by the candidate" 16. Further, Information Technology Software Services which was inserted by Finance Act, 2008 with effect from 16.5....
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....e by Cognizant Tech Solutions. From the facts in Cognizant Tech Solutions, the agreement was for carrying out IT related services by Cognizant Tech Solutions though staff / qualified personnel were to carry out such activities in the premises of the client. The Tribunal held that activity will not fall under manpower supply services. 19. Later, in another case, M/s. Future Focus Infotech Pvt. Ltd., for subsequent periodical demand, the Tribunal vide Final Order No. 41108/2018 dated 27.2.2018 had distinguished the decision rendered in Cognizant Tech Solutions. An argument was put forward during the hearing of that appeal by the counsel appearing for the appellant that there is a conflict in the decisions rendered by the Tribunal in their own case dated 3.3.2010 and the decision rendered in Cognizant Tech Solutions on the same date. A request was made to refer the issue to larger Bench. (Para 3(i)of the decision in Future Infotech Final Order dated 27.2.2018). The Bench looked into the facts of both these decisions and came to the conclusion that although on the first blush, the facts may appear similar, there is discernable differences. The Tribunal observed that M/s. Future ....
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.... performance. 5. Build batch process to collect stat to have COB of work better 6. Review current VB load programs and make necessary changes to get the benefit of partitioned tables rather than creating periodic multiple tables. For this assignment, two software engineers will work onsite at ABN AMRO Bank, Noida. One database specialist (Project Leader / Project Manager) would interest with the onsite team to provide the required guidance and monitor progress. For the purpose of commercials, it is assumed that this person would dedicate 50% of his working time for this purpose. Weekly reports would be provided to ABN AMRO Bank. The revised pricing for providing the recourses / assignment is INR 200,000. The rates for the resources are programmers (PL/SQL, BO)-INR85,000, Project Manager / BA - INR1,20,000 (ii) Central Bank of India Annual Maintenance Contract * Preventive and corrective maintenance of the computer systems / machines and will include supply and replacement of unserviceable parts * All maintenance / repairs shall be attended by the contractor (M/s. Sak Soft Ltd.) or authorized personnel of the contract. M/s. Sak Soft Ltd. Shall provide remote defect ma....
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....relating to maintenance of software and hardware infracture. * If any one of the personnel of service provider (M/s. Saksoft Ltd.) makes an application to join the organization (M/s. Scope International Pvt. Ltd.) and if she/he is found suitable for such appointment, M/s. Scope International Pvt. Ltd. Agree to reimburse M/s. Saksoft Ltd. With 10% of placement cost incurred by M/s. Saksoft Ltd. At the time of recruiting such employee * In any eventuality of the contract being terminated by them before its expiry, M/s. Scope International Pvt. Ltd. shall have an option to recruit 50% of the total number of employees assigned by M/s. Saksoft Ltd. in the subject project assignment and any exception to the above shall be mutually discussed and agreed. In such case, M/s. Scope International Pvt. Ltd. Shall reimburse M/s. Saksoft Ltd. with 10% of placement cost incurred by M/s. Saksoft Ltd. at the time of recruitment. * In respect of those of M/s. Saksoft Ltd. employees who have left the services of M/s. Saksoft Ltd and three months period have since lapsed, M/s. Scope International Pvt. Ltd shall have a right to recruit employees upon such application and in such an event no ....
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.... connected to BO and crystal reports * Software design / programming / writing / debugging / modifying / business analysis / project management (one or more or all of these activities) for the products and subsystems of client * Troubleshooting & maintenance of reports (i) ABN AMRO Bank From the second column which mentions the scope of work, it can be seen that the agreement is for software application development, application support and related services etc. On perusal of the agreement entered by the appellant with ABN AMRO Bank, in page 634 of the compilation, clause 4 reads as under:- (a) The contractor agrees that the contractor shall through supervisors appointed by the contractor, supervise and control the work of all the employees engaged by the contractor for the purpose of carrying out the obligations under this agreement and shall be fully responsible for maintaining the discipline, peace, good behavior, dealings and appearance of the contractor's employees who are deployed at the ABN AMRO premises. (b) In the event of the work carried out by the contractor or the contractor's employees is not found to be satisfactory, the contractor ....
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....ntractor must perform the work specified in such Task Order. In performing such work and subject to this agreement or Task Order, the contractor shall be free to exercise its discretion as to the method and means of performance of its services. The Task Order could be a Fixed Price engagement or a Time and Material engagement." Clause 3.2, 3.3 and 3.4 reads as under:- "3.2 The contractor will be entirely responsible for staff selection and hiring in order to fulfill the task orders, including, without limitation, determining and hiring the appropriate mix of skill types and expertise levels. However, the company may, at its sole discretion, review sample resumes and capabilities and interview key personnel (identified in the relevant task order) assigned to Fixed Price and Time and Material engagements and advise the contractor as appropriate. Further, the contractor shall be solely responsible for all matters in connection with its personnel (including, without limitation, provision of salary, benefits, training, promotions and provision of visas, work permits, housing and related matters while on-site). 3.3 The contractor will make available additional resources that could be....
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....iding maintenance services in relation to software of various kinds and has represented to HDFC Bank that it is able to provide such services. (C) The parties have therefore agreed that the supplier shall provide maintenance services to HDFC Bank in relation to software in accordance with the terms and conditions of this agreement. This agreement accordingly describes the scope of the services and the rights and obligations of the parties in relation to the provision of those services. Staff (a) The supplier agrees that during the term of this agreement and for a period of six months after its termination, the supplier shall not make an offer of employment to any staff of HDFC Bank in connection with the performance of this agreement without the prior written consent of the Authorized Representative of HDFC Bank. (b) It shall be the responsibility of the supplier to appoint and delegate appropriate staff for performing the services under this agreement. All such staff shall at all times be treated as employees of the supplier. (c) The supplier shall ensure that at all times during the term of this agreement it shall have sufficient....
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....rvice provider are not satisfactory. The service provider shall ensure that all of its personnel will at all times, during the term of this contract while on Scope's premises:- * Act diligently, ethically, soberly and honestly * Not take or use any drug unless prescribed by a medical practitioner or lawfully available without prescription and used in accordance with directions * Comply with all occupational health or safety policies of Scope including (but not limited to) those relating to a smoke free work environment during the course of their presence in the premises whenever required * Company with all procedure, rules, regulations, standards of conduct and lawful requirements of Scope in respect of use of its premises, equipment, business ethics or methodology or contact with its staff or Scopes while being on the premises as desired by Scope. * Not otherwise act in any manner, which could disrupt or adversely affect Scope's business reputation, interests or goodwill." From the above clauses, it can be seen that the appellant was engaged in providing software related services to Scope and all the staff / qualified personnel supplied to the premises of Scope....
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....oked into is whether the agreement is to execute the work for the client or merely supply the work force. What has to be examined is the core activity for which the agreement is entered between parties. The clients are not in IT related fields. They need services in the nature of annual maintenance of systems, testing, developing of software etc. The disputed transactions as per agreement do not reflect ingredients required for MRSA. 23. Show Cause Notice is the genesis of the litigation and the tax demand. As per para 6.10 of the Show Cause Notice, various clients have been mentioned which constitute the demand under MRSA. We have examined these transactions in the light of Show Cause Notice and documents placed before us. The ld. AR during the course of argument had submitted that some of the agreement would definitely fall under MRSA. Though the Bench requested to point out which of the clients would fall under MRSA, she was not able to clarify. Later, on 15.1.2021, after the orders were reserved, the ld. AR filed a short written additional submission stating that some of the agreements are not available with her and that the appellant has to be given time to ....
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.... MRSA service during the disputed period. On merits, we hold that the issue is settled by the decision in the case of Cognizant Tech Solutions cited supra. The demand under MRSA cannot sustain and requires to be set aside which we hereby do. 26. The Hon'ble High Court has remanded the matter to reconsider the issue on limitation also. The entire demand is raised invoking the extended period. In Coromandel Infotech India Ltd., the Tribunal had occasion to consider the issue of limitation when there were two conflicting views on the very same issue. Moreover, in the case before us, apart from bald allegation that the appellant has suppressed facts with intention to evade payment of service tax, there is no positive act brought out before us to establish the allegation of suppression. From page 80 onwards of Paper Book - I (filed along with the appeal), the appellant has enclosed the various correspondences between the appellant and department prior to issuance of show cause notice. On 14.9.2009, letter issued by the department to the appellant requesting to furnish documents. On 18.9.2009, the appellant has replied enclosing all the documents as requested by the department. On ....