TaxTMI 
TaxTMI 
2026 (2) TMI 1343
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....power recruitment or supply agency service'. 3. Initially, an audit was conducted on the financial documents of the appellant for the period from 01.01.2013 to 31.03.2014 by the officers of the Service Tax Audit Commissionerate, Kolkata. During the course of audit, it was noticed that the appellant had entered into (i) a job contract with M/s. Northern Railway Authority on 12.01.2012 and 12.11.2012 for providing "Linen Distribution Service" ('LDS' for short) at the coaches of various trains originating from New Delhi, and (ii) an agreement with M/s. Indian Railway Catering and Tourism Corporation Limited (IRCTCL) for rendering similar services. The audit officials gathered that the appellant had not paid Service Tax on the above said services rendered by them. With effect from 01.04.2014, the appellant has entered into an agreement with M/s. RailTel Corporation of India Limited ('RailTel' for short), a Company incorporated under the Companies Act 1956, for rendering the LDS services. Accordingly, a letter dated 18.12.2015 was issued, seeking clarification from the appellant regarding their Service Tax payments on the above services. Subsequently, a letter da....
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....n respect of the services rendered to M/s. Northern Railway Authority and M/s. IRCTCL; the taxable value worked out by the Department in the Show Cause Notice is as per the table given below: - Period Taxable value (Rs.) Service Tax rate Service Tax payable incl cess (Rs.) Source document (i) (ii) (iii) (iv) (v) 01.01.2013 to 31.03.2013 5,43,47,168 12.36% 67,17,310 Statement for the period from January'13 to March'15 of the assessee 2013-14 22,23,94,354 12.36% 2,74,87,942 2014-15 7,33,38,239 12.36% 90,64,606 TOTAL 4,32,69,858 2015-16 01.04.2015 to 31.05.2015 36,36,339 12.36% 4,49,452 Income Ledgers for the period 2015-16 submitted by assessee 01.06.2015 to 14.11.2015 2,18,25,783 14% 30,55,610 15.11.2015 to 31.03.2016 1,87,50,044 14.5% 27,18,756 2016-17 01.04.2016 to 31.05.2016 42,64,617 14.5% 6,18,369 Income Ledgers for the period 2016-17 submitted by assessee 01.06.2016 to 31.03.2017 3,86,70,146 15% 58,00,522 TO....
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....em M/s. RailTel for the normal period of limitation are concerned, it is the appellant's contention that the liability to pay Service Tax is on M/s. RailTel only. On this score, the Ld. Counsel for the appellant submitted that the said service rendered by the appellant to M/s. RailTel qualifies as 'supply of manpower service'; that as per Rule 2(1)(d)(i) of the Service Tax Rules, 1994, the Service Tax liability on 'supply of manpower' by any individual or partnership firm, to a business entity registered as a 'body corporate' is on the recipient of service. The appellant has cited Notification No. 30/2012-ST dated 20.06.2012, as amended, as per which the Service Tax liability in respect of manpower supply services has been divided into "25%" and "75%" for the service provider and service recipient respectively, i.e., 25% on the provider of service and 75% on the receiver of service. Accordingly, the appellant contends that they were only liable to pay 25% of the Service Tax on the said services up to 31.03.2015. It is pointed out that subsequently, w.e.f. 01.04.2015, vide amended Notification No. 7/2015-S.T. dated 31.03.2015, the 100% Service Tax liability is on the....
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.... that the contractor is fulfilling all statutory obligations mentioned in the contract agreement and providing minimum wages to his staff. 5. Service Tax being a statutory obligation will have to be considered as part of the cost of the services. However, this portion of 10.3% of the monthly billed amount will be payable to the contractor only as a reimbursement on submission of sufficient proof of having deposited the same with the Government. 6. Payment will be made through cheque/ECS/EFT only; no cash payment will be made. 7. 2% Income Tax and 15% surcharge on Income Tax or applicable at the time of payment shall be deducted from bill and necessary I.T. deduction certificate will be issued by Sr. DFM/New Delhi. 8. 2% sales tax will be deducted from all bills at source as per provision of Delhi Sales Tax Act 1999. 9. No extra payment like CST/ST, Octroi or other taxes whatsoever will be made to the contractor. 10. An amount against security deposit @ 5% of the contract value i.e. Rs. 47,00,000/-shall be recovered at the rate of 10% of the bill amount till the full security deposit is recovered. ACCEPTED SCEHDULE OF RATES ....
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....of the temporary engaged are liable to the transferred anywhere with in Northern Region from one job to another, one department to another, and one branch to another without any extra remuneration depending on the exigencies of the work. --------------------------------------------------------------- f) The temporary engaged persons so deployed by the AGENCY in RAIL TEL shall not have claim to any regular employment in RAIL TEL g) RAILTEL may at its discretion award/reward/incentives to efficient temporary engaged person(s) directly at any time." 10.4. From the scope of work and terms and conditions contained in the above agreement, we find that the appellant-agency has to deploy the manpower as required by M/s. RailTel. They are also required to supervise the work, but the manpower were under the control of M/s. RailTel, for deployment purpose. 10.4.1. A perusal of the invoices raised by the appellant on M/s. RailTel indicates that the charges have been raised for "Providing Manpower on Outsourcing Basis at various establishments and premises of RailTel". For ready reference, sample copy of one such invoice raised by the appellant on M/s. RailTel i....
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....d under sub-section (2) of section 68 of the Act, for each respectively." 10.7.1. We find that the Scope of Work and Terms and conditions of the agreement/s conform to the definition of 'manpower supply service' as defined above. 10.8. Hence, in view of the above, we hold that the services rendered by the appellant in this case are appropriately classifiable under the category of manpower recruitment or supply agency service. 11. Regarding the demand of Service Tax confirmed in the impugned order, we observe that the appellant has contested the demand on the ground of limitation. 11.1. From a perusal of the records, we find that initially, an audit had been conducted on the records of the appellant for the period from 01.01.2013 to 31.03.2014. The issue of Service Tax liability on LDS was raised by the audit team and accordingly, an Audit Memo dated 18.12.2015 had been issued by the audit group regarding the Service Tax liability on the appellant on LDS. For ready reference, the said Audit Memo issued by the audit group to the appellant is reproduced below: - 11.2. We find that even though the audit had raised the issue of Service Tax liability on the Linen Distr....
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.... 2,83,756.00 Total (B) 3,86,70,146.00 58,00,522.00 Grand Total (A+B) 4,29,34,763.00 64,18,891.00 12.1. As per the work sheet, the demand for the normal period works out to Rs.64,18,891/- [Rs.6,18,369/- + Rs.58,00,522/- (for 2016-17)]. We find that this amount tallies with the demand for the same period as calculated by the Department in the Show Cause Notice. We also observe that in support of receipt of the above amounts by them from M/s. RailTel during the period from 01.04.2016 to 31.03.2017, the appellant has furnished the invoices raised by them on M/s. RailTel, for the said services rendered. 12.2. We therefore find that the demand for the above pertains only to services rendered to M/s. RailTel, and not to M/s. IRCTCL / M/s. Northern Railway Authority, as evidenced by the list of invoices produced by the appellant in support of their claim. As per the amended Notification No. 7/2015-ST dated 31.03.2015, in respect of 'manpower supply service', 100% Service Tax liability is cast on the recipient of service, under reverse charge mechanism, for this period. M/s. RailTel qualifies as a 'body corporate' and the appellant as a pr....
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....t, 1994, stands set aside. 15. The appeal stands disposed of in the above manner. (Order pronounced in the open court on 26.02.2026) ============= Document 1 इंडियन रेलवे केटरिंग à¤à¤£à¥à¤¡ टूरिजà¥à¤® कॉरपोरेशन लिमिटेड (à¤à¤¾à¤°à¤¤ सरकार का उदà¥à¤¯à¤®-मिनी रतà¥à¤¨) INDIAN RAILWAY CATERING AND TOURISM CORPORATION LTD. (A Govt. of India Enterprise-Mini Ratna) COMPLETION CERTIFICATE Date : Complete name of the work: - Supply of Manpower Services to non-core functional units across India 1. Name and complete address of the Contractor Shomuk Engineering & Consultancy Services, G-1, Ground Floor, South Ext. Part-II, New Delhi-49 2. First date of acceptance/LOA 11.11. 2008 3 Brief description of nature and scope of the work Pantry services on the Trains, Customer Care, IT Supports Services, Tourism Supports Services, Receptioni....