Anand Automotive Ltd Vs Commissioner, Service Tax (CESTAT Delhi)
The impugned order has confirmed the demand of service tax against the appellant under the category of ‘manpower recruitment and supply agency service’ on the ground that the appellant was supplying manpower to its group companies.
According to the appellant, it deputes its employees to the group companies. In such cases, the group companies reimburse the salary of the employees to the appellant during the tenure of the deployment and so it cannot be said that the appellant is supplying any manpower as the appellant is not ‘engaged’ in rendering services of supply of manpower.
In Computer Sciences Corporation India P. Ltd., the Allahabad High Court made the following observations:
“8. In the present case, the Commissioner clearly missed the requirement that the service which is provided or to be provided, must be by a manpower recruitment or supply agency. Moreover, such a service has to be in relation to the supply of manpower. The assessee obtained from its group companies directly or by transfer of the employees, the services of expatriate employees. The assessee paid the salaries of the employees in India, deducted tax and contributed to statutory social security benefits such as provident fund. The assessee was also required to remit contributions, which had to be paid towards social security and other benefits that were payable to the account of the employees under the laws of the foreign jurisdiction. There was no basis whatsoever to hold that in such a transaction, a taxable service involving the recruitment or supply of manpower was provided by a manpower recruitment or supply agency. Unless the critical requirements of clause (k) of Section 65(105) are fulfilled, the element of taxability would not arise.”
(emphasis supplied)
In order to classify any service under the manpower recruitment or supply agency service the following conditions need to be satisfied:
i. The agency must be any person
ii. It must be engaged in providing a specified service
iii. The specified service is recruitment or supply of manpower
iv. The service can be provided “temporarily or otherwise‟
v. The service may be provided directly or indirectly
vi. The service may be provided in any manner
vii. The service must be provided to any other person
After relying upon the earlier decisions of the Tribunal and the High Court, the Tribunal in Lowe’s Services India set aside the demand raised by the Department under the category of manpower recruitment.
FULL TEXT OF THE CESTAT DELHI ORDER
M/s. Anand Automotive Limited1 has filed this appeal to assail the order dated April 18, 2013 passed by the Commissioner of Central Excise, Panchkula2, by which part of the demand of service tax proposed in the show cause notice dated February 24, 2011 issued for the period of October 01, 2005 to September 30, 2010 has been confirmed.
2. A summary of the demand proposed in the show cause notice and confirmed/ dropped by the impugned order is given in the following Table:
