2024 (6) TMI 849

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....or which the appellant was liable to pay service tax of Rs. 1,29,31,628/- for the period from 2014-15 to 2016-17. The show cause notice also proposed for demanding interest and penalties. The appellant filed reply to the show cause notice whereby the appellant submitted all the documents in support of their submissions that the appellant was not liable to pay service tax. Thereafter, the appellant filed detailed reply on 04.08.2021 whereby it was submitted as under :- (i) The appellant being legal firm, provided legal services; (ii) Recipient of the services was liable to pay service tax under RCM under Notification No. 30/2012 (iii) EIPL deducted TDS under Section 194J being the Appellant provided services legal service; (iv) The appellant arranged to pay all the charges to labours. In term of concept of pure agent, the liability to pay service tax on reimbursement of expenses does not arise since the Appellant had no role in managing work force of EIPL. It was only obligation upon the Appellant to verify the compliance of statutory provisions and make payment of salary/wages paid by EIPL to its labours. (v) It was submitted that the services related to supply of manpowe....

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....e present appeal. 2. Shri Hardik Modh, Learned Counsel appearing on behalf of the Appellant submits that the demand cannot be made based on the data submitted by Income Tax Department without making independent inquiry. It is undisputed facts that the entire case has been booked based on the data supplied by the Income Tax Department. It is settled law that demand of service tax cannot be made based on the income tax data without making separate independent inquiry. He placed reliance on the following judgments:- (i) Krishna Construction Vs. CST, Bhavnagar - 200 (8) TMI 644 - CESTAT, Ahmedabad (ii) Forward Resources Pvt. Ltd. Vs. CCE, Surat-I - 2022 (7) TMI 716. 2.1 He further submits that as per the fact that the appellant has provided not the business auxiliary service but Manpower Supply Service therefore as per Notification No. 30/2012 - ST the recipient of service is liable to pay service tax on Manpower Supply Service on RCM if the same is provided to business entity. Prior to April 2015 the liability on the service provider was 25% on the service value which has been made zero with effect from 2015-2016. However, the recipient of service has stated that the service tax....

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....nd the service tax paid under the category of Manpower Supply Service was duly accepted by the revenue without any demur. Hence, the dispute regarding classification ought not to have been raised in the hands of provider of service. 2.3 Without prejudice to the aforesaid, he submits that if the appellant accepts the finding in the impugned order, the liability of service tax arises under the legal consultancy services as TDS was deducted under Section 194J under the Income Tax Act. In such situation liability of service tax raised under RCM in view of the recent decision passed by the Hon'ble Bombay High Court in case of Advocate Pooja Patil vs. Deputy Commissioner of CGST & Cx. - Writ Petition No. 1085 of 2022. He referred to the agreement dated 19.09.2010 entered into between the appellant and EIPL and submits that from the agreement it is clear that the service does not fall under Business Auxiliary Service whereas appellant provided legal consultancy service. He submits that the Learned Commissioner (Appeals) has wrongly interpreted the terms of the agreement which is not correct and legal as held in the following judgments. Union of India vs. Mahindra & Mahindra Ltd -1995 (....

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....ivity as business auxiliary service however, the appellant have vehemently submitted that as per the agreement the activity of the appellant is classified under Legal Services and if not under Manpower Supply Service. In both the services, the service recipient is liable to pay service tax under RCM. To understand the actual nature of the service we reproduce the clauses of the agreement dated 19.09.2010 as under:- JK Associates will see the statutory compliance of contract labour and also visit the factory once in a week. Also the J K Associates will witness the salary paid to contract employees. J K Associates will organise the payment schedule and inform the company and accordingly company will transfer money in their account for disbursement. This will not be considered as an income of second party. As the salary is paid by the company including PF, Bonus, ESI OT etc. The same will not be considered as an income of J K Associates as the same will be distributed to workers for which all statutory record shall be maintained. JK Associates will provide all notifications related to laboμr laws issued by the Govt from time to time. Also shall have to advise on all the l....