TaxTMI 
TaxTMI 
2024 (7) TMI 1600
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....with the Department for rendering various taxable services viz. Airport Services, Business Auxiliary Services, Consulting Engineering Service, Manpower Recruitment Agency service etc. On the basis of intelligence, investigation was initiated which revealed that the Appellant though recipient of taxable services provided from outside India had not discharged appropriate service Tax e under Rule 2(1)(d)(iv) of Service Tax Rules, 1994. It further revealed that the appellant had entered into a service agreement with M/s. Unique (Flughafen Zurich AG), Switzerland (M/s. Unique, for short) for providing personnel to work with the appellant and the salaries are agreed to be paid in convertible foreign currency for which the overseas company M/s. Unique raised debit notes on the appellant with details of remuneration disbursed on behalf of the appellant. It is alleged that the activity attracts service tax under the category of "Manpower Recruitment or Supply Agency Services" under Section 65(68) read with Section 65(105)(k) prior to 01.07.2012 and under the provisions of Section 65(B)(44) read with Section 65(B)(51) of the Finance Act, 1994, but did not discharge service tax on the same. A....
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....Manpower supply 67,58,560 u/s 75 u/s 76 u/s 77(1)(a) u/s 77(2) 3. At the outset, the learned advocate for the appellant has submitted that the appellant Company was promoted by the following indigenous and overseas companies viz. (a) M/s. Siemens Project Ventures, Germany ('SPV'), (b) M/s. Unique Zurich Airport Limited, Switzerland (UZA), (c) Larsen & Toubro Limited (L&T), (d) Airport Authority of India (AAI) and (e) Karnataka State Industrial Investment Development Corporation (KSIIDC). He has submitted that the entities at (a), (b), (c) are private promoters and (d) & EUR are state promoters; besides (c), (d) and (e) resident promoters and (a) & (b) are non-resident promoters. 3.1 Assailing confirmation of demand on 'Manpower Recruitment or Supply Agency services', he has submitted that by respective agreements with overseas company M/s. Unique, the appellant has recruited some of the employees of M/s. Unique on fulltime basis as assigned and exclusively for the service of the appellant during the assignment period. He has submitted that the terms and conditions of the Secondment Agreement in issue is quite different from the judgment delivered by the Hon'ble Supreme ....
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.... (Tri. Bang.)] iii. Uniflex Cables ltd. Vs. CCE, Surat [2011(271) ELT 161 (SC)] iv. CST, Bangalore Vs. Motor World [2012(27) STR 225 (Kar.)] 3.2 Further he has submitted that the demand of Rs. 41,26,163/- confirmed by the ld. adjudicating authority under 'Management Consultancy Services' under Section 66A of the Finance Act, 1994 is unsustainable. Further he has submitted that the learned Commissioner analysing the scope of the definition of 'Management Consultancy Service' held that the appellant had paid the cost/expenses with regards to services viz. design, engineering and development of the project, air traffic study etc. 01.01.2005 to 31.03.2006; hence squarely fall within the Section 65(65) read with Section 65(105)(r) of the Finance Act, 1994. Further, he has submitted that the appellant accepting their liability under the scope of 'Management Consultancy Services', excluding the development cost, paid service tax of Rs. 6,15,221/- for the period 2005-06. Out of this total amount of Rs. 30,26,246/-(excluding development cost) Rs. 6,15,221/- has been paid by them under the said service; Rs. 99,144/- relates to legal consultancy r....
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.... learned Commissioner analysing the scope of services held that there was no evidence placed by the appellant to substantiate their claim that the amount received from the unsuccessful bidders were not connected with airport services; hence confirmed the demand of Rs. 26,68,873/- against the category of airport services. The said observation of the Ld. Commissioner is erroneous as no service was rendered by the unsuccessful bidders and received by the Appellant. 3.7. He has also submitted that the credit of Rs. 6,63,716/- availed on various services which do not fall under the scope of definition of input service under Rule 2(l) of the CENVAT Credit Rules, 2004; therefore, rightly confirmed by the learned Commissioner. 3.8. Learned advocate, further assailing the confirmation of demand on Airport Services' relating to tender fee collected and retained, has submitted that the tender fee is collected from the contractors who seek to bid/tender for specific work/projects that are awarded by the appellant. The purpose for collection of tender fees are: (a) to ensure genuineness of contractors and (ii) to meet tender expenses. Therefore, these collections are not towards....
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....is squarely applicable to the facts of the present case. Therefore, the demand is rightly confirmed by the adjudicating authority on this count. He has fairly accepted that in view of the judgement of the Hon'ble Supreme Court in Northern Operating Systems Pvt. Ltd. (supra), the invocation of larger period of limitation cannot be sustained. 4.1. The Ld. Authorized Representative appearing for the Revenue has submitted that the Ld. Commissioner also confirmed the demand on 'Management Consultancy Services' and 'Airport Services' for the period from April 2004 to March 2009. 4.2. Supporting the finding of the Ld. Commissioner, he has submitted that during the period in question, the appellant had received services in relation to design, engineering and development of projects, air traffic studies, design studies, etc., which squarely fall within the scope of the definition of 'Management Consultancy Service' and also the definition of the taxable service as prescribed under Section 65(105)(r) of the Finance Act, 1994. Therefore, it is contended that the services with regard to development of airport, being provided as per the shareholder's agreement and the appellant having dis....
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....873/- under 'Airport Services'. 5. Heard both sides and perused the records. 6. The issues involved in the present appeals for consideration are whether: (i) the appellant is required to discharge service tax under reverse charge mechanism for services received under the category of 'Management Consultancy Services", 'Manpower Supply Agency Service' during the relevant period involved in each of the appeal in the light of the judgment of Hon'ble Supreme Court in the case of CC, CE&ST, Bangalore (Adjudication) Vs. Northern Operating Systems Pvt. Ltd.; (ii) service tax is leviable under airport services (Appeal No. ST/2429/2011) on the deposit amount collected from unsuccessful bidders; (iii) cenvat credit is admissible on various input services; (iv) extended period of limitation is invokable in appeal No. ST/2429/2011; and interest and penalty are leviable on the appellant. 7. To analyse the first issue, that is, whether manpower service supplied by M/s. Unique to the appellant, is leviable to service tax under reverse charge basis, for the period in question, it is necessary to examine whether the ratio of the judgment in the ....
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.... income-tax returns and contribute to the provident fund. Furthermore, NOS remits the above amounts in foreign exchange, which are reflected in its financial statements. The assessee is reimbursed (by the foreign entity, Northern Trust Company - hereafter described as such) for the amounts it pays as salaries, to these seconded employees. The assessee pays for certain services received from the group companies. The assessee used to discharge service tax on payments for such services in terms of Section 66A of the Act. The appropriate major expense heads were 'Salaries & Allowances', 'Relocation expenses', 'Consultancy Charges', 'Communication Expenses' and 'Computer Maintenance and repairs.' 9. The terms and conditions relevant to the present case, extracted from the agreement dated 11.07.2005 to examine the rival claims, are as below:- EXPATRIATE REMUNERATION REIMBURSEMENT AGREEMENT THIS AGREEMENT is entered on July 11th, 2005 by and between Bangalore Internation Airport Ltd., a company organized and existing under the laws of India and located at Khanija Bhavan, Ground Floor, #49, Race Course Road, Bangalore 560 001 (hereinafter referred to as 'BIAL') and Unique (F....
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....eed by the Parties that BIAL will promptly reimburse to Unique such Foreign Currency Remuneration being paid by Unique and from the Effective Date (as hereinafter defined) in accordance with the terms and conditions herein 1.0 ... .... 2.0 ... ... 3.0 Reimbursement of the Foreign Currency Remuneration. 3.1. In consideration for the assignment services to be provided by the Assignee of Unique to BIAL during the period commencing as set out in Schedule 1, BIAL agrees to reimburse Unique for the Foreign Currency Remuneration made by Unique to the Assignee subject to any requisite approval of the Government of India / Reserve Bank of India. 3.2. The Foreign Currency Remuneration paid by Unique to the Assignee shall be reimbursed by BIAL on a cost to cost basis. 3.3. Unique shall quarterly send to BIAL Debit Notes for the reimbursement of the Foreign Currency Remuneration paid by it to the Assignee and BIAL agrees to pay the notes within 30 days of receipt. 3.4. The Foreign Currency Remuneration reimbursable by BIASL to Unique under this Agreement shall be net of any withholding or other applicable taxes which shall be the s....
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....l for facilitating the business operations in India and the overseas company, which has such personnel, who possesses the requisite qualification and skill desired to employ such persons on exclusive basis and the overseas company has duly consented to depute such personnel. The deputed personnel while under employment with the appellant was not in any way subjected to any kind of instruction or control or direction or supervision of the overseas company and they would report only to appellant's management. They function solely under the control, direction and supervision of appellant and in accordance with the policy, rules, guidelines applicable to the employees of the appellant. The appellant shall have the sole right to take punitive steps against misconduct, negligence, fraud or unsatisfactory performance of work by the dispatched personnel during employment with the appellant company and also have the right to terminate the employment. The remuneration to be paid by the appellant to dispatched personnel as laid down at Schedule 2 comprising of Monthly salary in India; Monthly Salary in Switzerland; Bonus in Switzerland and any other allowance paid / cost incurred for the disp....
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....mployee has the discretion to terminate the relationship (Article II); (v) The overseas employer (group company) pays the seconded employee, which is reimbursed to the overseas company, by the assessee (Article III); (vi) The assessee is responsible for the work of the seconded employee, i.e., the overseas employer, during the secondment period, is absolved of any liability for the job or work of its seconded employees (Article VII); (vii) The secondment is for a specified duration, and the employment with the assessee ceases upon the expiration of that period (Article II of the secondment agreement and the "Duration" clause in the letter of understanding with the seconded employee); (viii) The letter of understanding issued to the seconded employee specifies that the tenure with the assessee is an assignment (in one place, the term used is "At its conclusion, repatriation will be in accordance with the Global Mobility Repatriation Policy"); (ix) The terms include the salary payable as well as other allowances, such as hardship allowance, vehicle allowance, servant allowance, paid leave, housing allowance, etc. The nature of salary and o....
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....it manpower or other resources availability) to perform the specific tasks given it, by the overseas company. As part of this agreement, a secondment contract is entered into, whereby the overseas company's employee or employees, possessing the specific required skill, are deployed for the duration the task is estimated to be completed in. This Court is not concerned with unravelling the nature of relationship between the overseas company and the assessee. However, what it has to decide, is whether the secondment, for the purpose of completion of the assessee's job, amounts to manpower supply. 53. Facially, or to put it differently, for all appearances, the seconded employee, for the duration of her or his secondment, is under the control of the assessee, and works under its direction. Yet, the fact remains that they are on the pay rolls of their overseas employer. What is left unsaid - and perhaps crucial, is that this is a legal requirement, since they are entitled to social security benefits in the country of their origin. It is doubtful whether without the comfort of this assurance, they would agree to the secondment. Furthermore, the reality is that the secondment is ....
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....eight." 57. Taking a cue from the above observations, while the control (over performance of the seconded employees' work) and the right to ask them to return, if their functioning is not as is desired, is with the assessee, the fact remains that their overseas employer in relation to its business, deploys them to the assessee, on secondment. Secondly, the overseas employer - for whatever reason, pays them their salaries. Their terms of employment - even during the secondment - are in accord with the policy of the overseas company, who is their employer. Upon the end of the period of secondment, they return to their original places, to await deployment or extension of secondment. 58. One of the arguments of the assessee was that arguendo, the arrangement was "manpower supply" (under the unamended Act) and a service [(not falling within exclusion (b) to Section 65(44)] yet it was not required to pay any consideration to the overseas group company. The mere payment in the form of remittances or amounts, by whatever manner, either for the duration of the secondment, or per employee seconded, is just one method of reckoning if there is consideration. The other way of ....
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....al period of limitation in appeal No. ST/2429/2011. 14. Resisting the demand confirmed in the impugned Order under the taxable category of 'Management Consultancy Services' (ST/2429/2011), for the period April 2004 to March 2009 amounting to Rs. 41,26,163/-, it is submitted that the demand pertaining to the period prior to 18/04/2006 cannot be sustained in any case in view of the judgment of the Hon'ble High Court of Bombay in the case of Indian National Shipowners Association (supra) and upheld subsequently by the Hon'ble Supreme Court. For the demands raised on account of said services post 18.04.2006, it is argued that these are in the nature of reimbursable expenses; hence cannot be sustained in view of the judgment of the Hon'ble Supreme Court in the case of UOI Vs. Intercontinental Consultants and Technocrats Pvt. Ltd. (supra) prior to 14/05/2015. 15. We find that a total amount of Rs. 41,26,163/- has been confirmed under this category 'Management Consultancy Services' (ST/2429/2011). Also, as submitted on behalf of the appellant an amount of Rs. 17,15,138/- pertained to the period prior to 18.04.2006 and covered by the judgement of the Hon'ble High ....
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....d that the confirmation of demand by the ld. adjudicating authority is incorrect. 17. We find merit in principle in the contention of the Ld. Advocate for the appellant that the Revenue could not establish that the unsuccessful bidders have rendered any services to the appellant and thus, the amount collected as a pre-bid offer from unsuccessful bidders cannot be considered as a "consideration" for rendering Airport Services and accordingly not leviable to Service Tax. However, we find that the Ld. Commissioner has confirmed the demand on altogether a different ground. He has held that except submitting list of unsuccessful bidders, no documentary evidence has been placed on record to prove that the said amounts relate to unsuccessful bidders and consequently, he has confirmed the demand. Therefore, to ascertain this fact, we are of the view that this issue needs to be remanded to the adjudicating authority. 18. On the issue of availing CENVAT Credit on various input services namely, photography and videography services, asset hiring, landscaping services, office rent, civil and interior work, etc., the appellant has argued that these services are held to be 'input services' ....