Varada Manpower Solutions Vs Commissioner of Central Excise & CGST (CESTAT Allahabad)
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Allahabad, allowed the appeal filed against an Order-in-Appeal that had upheld a reduced service tax demand. The dispute arose from data received from DGARM, New Delhi, for the financial year 2016-17, indicating that the appellant had received ₹6.18 crore for taxable services. Based on this information, the department issued a show cause notice on 22.10.2021 demanding service tax of ₹46.26 lakh, including Swachh Bharat Cess (SBC) and Krishi Kalyan Cess (KKC), along with interest and penalties. The adjudicating authority confirmed the demand and imposed penalties.
On appeal, the Commissioner (Appeals) reduced the demand to ₹8.26 lakh. Relief was granted in respect of services provided to one recipient after considering evidence that service tax had already been paid by the recipient under the Reverse Charge Mechanism (RCM). However, the remaining demand was sustained because no documentary evidence was produced regarding another recipient.
Before the Tribunal, the appellant contended that it was engaged in providing manpower supply services and that the service recipients were paying 100% of the service tax under Section 68(2) of the Finance Act, 1994 read with Notification No. 30/2012-ST under the Reverse Charge Mechanism. The appellant argued that, as a service provider, it was not liable to pay service tax where the recipient had already discharged the tax liability.
