Tesco Bengaluru Private Limited and Others Vs Commissioner of Central Excise and Service Tax (CESTAT Bangalore)
Summary: CESTAT Bangalore examined three appeals arising from an adjudication order dated 5 October 2016 concerning service tax on employees assigned to Tesco Bengaluru by overseas associated entities. The Department alleged that the company received taxable manpower supply services from overseas entities without discharging service tax under the reverse charge mechanism. The Tribunal considered the Supreme Court ruling in Northern Operating Systems Pvt. Ltd., the contractual terms of the employee assignments, limitation and penalties. It held that manpower-related service tax was payable for the normal limitation period, but the extended period and penalties could not be sustained.
The company provided information technology and IT-enabled services supporting overseas Tesco retail operations. The show-cause notice dated 9 October 2013 proposed recovery of ₹1,77,47,868 on imported employee services for 1 April 2010 to 31 March 2013, ₹7,64,643 under Information Technology Software Services and ₹7,65,644 under Commercial Training or Coaching Services. The Commissioner confirmed the demands with interest and penalties. The company challenged the taxability of secondment and penalties on other services, submitting that the corresponding tax and interest for the latter categories had been paid before the notice. Two individual appellants also contested personal penalties.
The appellant relied on the Cost Reimbursement Agreement for Assignment dated 1 April 2010 with Tesco International Services Limited, United Kingdom. It maintained that the assigned employees worked exclusively for the Indian company, which exercised day-to-day control, supervised their work and bore their remuneration costs. Overseas payroll payments were reimbursed at actual cost for administrative convenience. The appellant argued that these facts distinguished the arrangement from Northern Operating Systems and that the disputed legal interpretation precluded extended limitation and penalties. The Revenue relied on Northern Operating Systems and subsequent Tribunal decisions to defend the demands.
After comparing the contractual terms, the Tribunal found no material difference from the secondment arrangement considered by the Supreme Court. It therefore upheld service tax on manpower supply for the normal period, but ruled out extended limitation. Since service tax and interest on Information Technology Software Services and Commercial Training or Coaching Services had been paid before the show-cause notice, the Tribunal also set aside penalties relating to those services. The company’s appeal ST/20036/2017 was remanded for recomputation of liability, and the individual appeals ST/20034/2017 and ST/20035/2017 were allowed. The order was pronounced on 21 February 2025.
Cases Discussed
- CC, CE & ST, Bangalore (Adjudication) Vs Northern Operating Systems Pvt. Ltd., 2022 (61) G.S.T.L. 129 (SC)
- Dell International Services India Pvt. Ltd. Vs CCE & C, Bangalore, 2023 (5) Centax 111 (Tri.-Bang.)
- Bangalore International Airport Limited Vs Commissioner of Service Tax, Final Order Nos. 20546–20550, 20551/2024 dated 09.07.2024
FULL TEXT OF THE ORIGINAL JUDGMENT/ORDER OF CESTAT BANGALORE
These appeals have been filed against Order-in-Original No.BLR-EXCUS-05-COM-29/2016-17 dated 05.10.2016 passed by Commissioner of Central Excise and Service Tax, Bangalore.
2. Briefly stated that the facts of the case are that the appellants are registered with Service Tax Department for rendering taxable services under the category of ‘Information Technology Software Service’, ‘Business Auxiliary Service’, and ‘Manpower Recruitment and Supply Agency Service’. On the basis of intelligence, investigation was initiated against the Appellant, since they had received taxable services from their foreign associates and other foreign entities, but failed to discharge the Service Tax on the same under ‘Reverse Charge Mechanism’ as laid down under Section 66A of the Finance Act, 1994. On completion of investigation, they were issued with a show-cause notice on 09.10.2013 for recovery of Service Tax amounting to Rs.1,77,47,868/- for the period from 01.04.2010 to 31.03.2013 against the import of foreign employee services, Rs.7,64,643/- under the taxable category of ‘Information Technology Software Services’ for the period from 2008-09 to 2011-12; and Rs.7,65,644/- for the period from 2008-09 to 2010-11 for rendering taxable services under the category of ‘Commercial Training or Coaching Services’ along with interest and penalty. On adjudication, the learned Commissioner confirmed the demands with interest and penalty appropriated the amount paid during the course of investigation. Hence, the present appeal.
3. At the outset, the learned Advocate for the Appellant submitted that the Appellants are engaged in providing Information Technology Software Services (ITSS) and Information Technology Enabled Services (ITES) to its affiliate entities, these services are support services provided to the retail operations of Tesco Overseas Entities, including the operations of hypermarkets, supermarkets and convenient stores. The IT services provided by the company assists the Overseas Entities in managing their retail operations; for example, assistance in managing software deployed at check-out/cash counters at retail stores. The Appellant at Bangalore also provides customer services, financial services, stores help desk, IT Development Services to its affiliate entities.
4. However, the issue in the present case is whether the assignment of employees by Overseas Entities to the Appellant during the period April 2008 to March 2013 is taxable as ‘Manpower Recruitment and Supply Agency Service’ (upto June 2012) and as a ‘service’ rendered from 01.07.2012; also, whether extended period of limitation can be invoked for recovery on this count. Further, he has submitted that in the present case, they are challenging the levy of Service Tax with interest and penalty on the alleged taxable services rendered to group entities under the category of ‘Manpower Recruitment and Supply Agency Service’ also penalty imposed on ITSS and Commercial Training or Coaching Services when the entire amount was paid before issuance of show-cause notice with interest. Also personal penalty imposed on other Appellants Mr. Karandeep Singh, Director (Finance) and Mr. Raja Pawha, Head of Tax Department has been conducted.
5. Distinguishing the judgment delivered by the Hon’ble Supreme Court in the case of CC, CE&ST, Bangalore (Adjudication) Vs. Northern Operating Systems Pvt. Ltd. [2022(61) GSTL 129 (SC)] the learned advocate has submitted that, the ratio laid down in the said case cannot be applied to the facts and circumstances of the present case. He has submitted that, the assignees deputed are employees of Tesco, Bengaluru which is evident from the documents like Form 16, employment agreement, the Appellant is responsible for payment of salaries to assignees; they had control over major aspects of employment; he has further submitted that continuation of employment with overseas entities does not affect the employment of assignees with Appellant; also requirement to return to overseas does not negate employer- employee relationship with the appellant.
6. Further, he has submitted that, the significant factors distinguishing the applicability of judgment to the present case is the purpose of secondment of employees, control and supervision, duration of secondment, terms of employment etc., He has submitted that in the present case there is no one-to-one nexus between the tasks assigned by overseas entity and the work to be performed by the secondees, instructions and policies of Indian entity are to be followed as specified in cost reimbursement agreement; secondees are deployed for a fixed duration of time and the functions, scope of work, roles and responsibilities which are to be carried out by the secondee employees are decided solely by the Appellant at Bengaluru.
7. The Learned Advocate, thereafter, analyzing the clauses of the present greement with that of the agreement considered by the Hon’ble Supreme Court in Northern Operating Systems Pvt. Ltd. (supra) submitted that both are operating in a different sphere, therefore, no analogy can be drawn in applying the ratio of the said judgment to the facts of the present case.
8. Further, he has submitted that the Hon’ble Supreme Court in the aforesaid case had set aside the demand for extended period of limitation. Hence, in the present case also, extended period of limitation cannot be invoked in confirming the demand. Further, he has submitted that since the issue relates to interpretation of various provisions which were not clear at the relevant time, imposition of penalties on the Appellants is also unwarranted. Further, he has submitted that in relation to service tax liability of ITSS and Commercial Training or Coaching Services, the appellant accepting the same had paid the entire amount of Rs.15,14,154/- and interest of Rs.10,70,986 much before the issuance of show-cause notice; therefore, imposition of penalty on this ground is also unsustainable in law.
9. Per contra, learned Authorised Representative (AR) for the Revenue has submitted that the issue involved in the present case is squarely covered by the judgment of the Hon’ble Supreme Court in the case of Northern Operating Systems Pvt. Ltd. (supra) which has been followed subsequently by this Tribunal in the case of Dell International Services India Pvt. Ltd. Vs. CCE&C, Bangalore [(2023 5 Centax 111 (Tri. Bang.)] and in the case of M/s. Bangalore International Airport Limited. vs. the Commissioner of Service Tax: Final Order Nos.20546–20550, 20551 /2024 dated 09.07.2024.
10. Heard both sides and perused the records.
11. 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 Recruitment and Supply Agency Service’ during the relevant period involved in this appeal in the light of the judgment of Hon’ble Supreme Court in Northern Operating Systems Pvt. Ltd. (supra).
(ii) Extended period of limitation is invokable in confirming demand for the period from April 2008 to March 2013; and penalty is imposable when the service tax demand along with interest is paid before issuance of show-cause notice on ITSS and Commercial Training or Coaching Services.
12. The applicability of Service Tax on supply of manpower by the Overseas Associate entities to the Indian counterparts has been considered by the Hon’ble Supreme court in the case of Northern Operating Systems Pvt. Ltd. (supra). The basic contention of the Appellant is that the principle laid down in the aforesaid case is not applicable to the facts of the present case. Therefore, in analyzing the argument advanced by the Appellant distinguishing the ratio of the said Judgment, it is necessary to read the judgment of the Hon’ble Supreme Court and the facts involved therein.
13. The Hon’ble Supreme Court at para 3 of the judgment briefly laid down the essence of the agreement entered between the overseas entities and the Indian counterpart relating to supply of manpower for undertaking the operation in India, the same is reproduced as below:-
“3. The nature and contents of the agreements, are discernible in their description, extracted from the impugned order – where the assessee has been referred to as “the appellant” by the CESTAT – which is as follows:
“The relevant terms of the agreement to understand the activity are as follows:
(a) When required Appellants requests the group companies for managerial and technical personnel to assist in its business and accordingly the employees are selected by the group company and they would be transferred to Appellants.
(b) The employees shall act in accordance with the instructions and directions of Appellants. The employees would devote their entire time and work to the employer seconded to.
(c) The seconded employees would continue to be on the payroll of the group company (foreign entity) for the purpose of continuation of social security/retirement benefits, but for all practical purposes, Appellants shall be the employer. During the term of transfer or secondment the personnel shall be the employee of Appellants. Appellants issue an employment letter to the seconded personnel stipulating all the terms of the employment.
(d) The employees so seconded would receive their salary, bonus, social benefits, out of pocket expenses and other expenses from the group company.
(e) The group company shall raise a debit note on Appellants to recover the expenses of salary, bonus etc. and the Appellants shall reimburse the group company for all these expenses and there shall be no mark-up on such reimbursement.”
As a matter of fact, the assessee issues the prescribed forms to the seconded employees, in terms of the Income-tax Act, 1961 (hereafter “IT Act”). Those individuals too file 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.’
14. In the present case, the terms and conditions stipulated in the Cost Reimbursement Agreement for Assignment dated 01.04.2010 entered between Tesco International Services Ltd., UK and the Appellant needs to be examined to ascertain the claim of the Appellant about the applicability of the said judgment. The relevant clauses of the said agreement are reproduced below:
COST REMUNERATION AGREEMENT FOR ASSIGNMENT
THIS AGREEMENT is made on April 1, 2010
BETWEEN:
Provider
TESCO INTERNATIONAL SERVICES LIMITED a company incorporated in England (registered number 03176368) whose registered office is situated at Tesco House, Delamare Road, Cheshunt, Hertfordshire, EN8 9SL, United Kingdom (hereafter referred to as “TSL”); and
User
TESCO HINDUSTAN SERVICE CENTRE PRIVATE LIMITED, a company Incorporated In India (registered number 72200KA2003PTC032530) whose registered office is situated at 81-82 EPIP Area, Whitefield, Bangalore, 56066 India
WHEREAS:
(A) The User desires the Provider to assign personnel to the User to fill certain positions from time to time and the Provider is willing to send the Assignees to work at the User, subject to conditions of this Agreement.
(B) The Assignees will be assigned to the User during the period of the assignment, and they will work wholly and exclusively for the User during the assignment.
(C) For administrative convenience, the Provider shall continue to initially incur the costs of payments to each Assignee during the assignment. However, the User is ultimately responsible for remunerating and bearing the costs of the Assignees during the assignment and, therefore, will be responsible for reimbursing the Payroll and Other Remuneration Costs and Expenses incurred Provider during the period of the assignment by the
It is agreed as follows:
1 Definitions and Interpretation
1.1……. ……….
Assignee/Assignees……. ……… Payroll and other Remuneration Costs and Expenses…… ……..
2. ASSIGNMENT 2.1 ……… ……….
3. REIMBURSEMENT OF COSTS TO THE PROVIDER Cost of assigning the Assignees
3.1 Where an Assignee is assigned to the User, the Provider shall be responsible during the assignment of such Assignee to the User for the payment or provision to each of the Assignees or any other party designated by the, Assignee of such amount of Payroll And Other Remuneration Costs And Expenses as agreed between the Provider and the Assignee at the time of the assignment.
3.2 The User is primarily responsible for remunerating and bearing the costs of the Assignees during the assignment, and It is only for administrative reasons that the Provider shall continue to initially Incur the costs of payments to each Assignee during the assignment. Hence, the User shall be responsible for reimbursing the Payroll and Other Remuneration Costs and Expenses incurred by the Provider during the period of the assignment.
Reimbursement
3.4 The User shall reimburse the Provider on an actual cost basis all payments of Payroll And Other Remuneration Costs And Expenses made or Incurred by the Provider pursuant to clause 3.1 as invoiced on an itemised basis in accordance with clause 3.8 and/or clause 3.9 (as the case may be), For the avoidance of doubt, if the relevant Assignee is subject to Personal Income tax in India and the Provider or via a paying agent) operates payroll withholding in relation to such payments of Payroll And Other Remuneration Costs And Expenses then the Provider will include this in the actual costs to be reimbursed. If the relevant Assignee is subject to Hypothetical tax and the Provider is not required to operate payroll withholding tax in Hypothetical tax relation to such payments of Payroll and Other Remuneration Costs and Expenses then the Provider will not include this in the actual costs to be reimbursed.
3.7 Within the scope of the User’s policies, all expenses actually, reasonably and properly incurred by an Assignee in the course of his assignment or when acting on behalf of the User solely in connection with the Business (Including costs of property rental, hotel accommodation, relocation costs, overseas travel allowances, business expenses, provision of motor vehicles for business or private use, where such expenses have not been borne by the Provider pursuant to clause 3.1) shall be borne by the User and shall be reimbursed by the User to the Assignee in local currency on the production of relevant and proper receipts.
RESPONSIBILITIES OF THE PARTIES
Responsibility of the User
4.2. The User shall;
4.2.1 provide and maintain facilities suitable for the work of the Assignees,
4.2.2 have the day-to-day control of the Assignee’s activities during the assignment, including providing guidance and supervision to the Assignees during the assignment,
4.2.3 be responsible for all actions of the Assignees during the assignment;
4.2.4 facilitate the Assignees to devote such time and attention to the affairs of the User as is required to fulfil their duties;
4.2.5 ensure that the Assignees report directly to the specified person/position in the User:
4.2.6 arrange for any and all required entry/exit/re-entry visas, work permits, residence visas and internal travel permits for the Assignees and their families, and
4.2.7 carry out the performance evaluation based on the performance objectives, set by the Assignees, supervisor and the actual results achieved by the Assignee during the period of assignment.
15. In the Cost Reimbursement Agreement for Assignment referred above between the Appellant and their Overseas Company reveals that the terms and conditions are more or less similar to the one referred to in para 3 of the judgment of the Hon’ble Supreme Court in Northern Operating Systems Pvt. Ltd. (supra). In the present case also, the appellant was in need of personnel 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 to India. The deputed personnel while under employment with the appellant was not in any manner subjected to any kind of instruction or control or direction or supervision of the overseas company and required to report to the appellant’s management in India. 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 seconded personnel during employment with the appellant company and also have the right to terminate the employment. The details of the salary to be paid by the appellant to the assignees are enumerated in the said agreement.
16. A careful reading of the sample ‘Reimbursement Agreement’ and also the contract of the employment, letter of employment etc., we do not find any major difference from the facts stated in the judgment of Hon’ble Supreme Court in Northern Operating Systems Pvt. Ltd.’s case. After analyzing the secondment agreement, their Lordships observed as follows:-
48. The task of this Court, therefore is to, upon an overall reading of the materials presented by the parties, discern the true nature of the relationship between the seconded employees and the assessee, and the nature of the service provided – in that context – by the overseas group company to the assessee.
49. A co-joint reading of the documents on record show that:
(i) Attachment 1 to the service agreement ensures that the overseas group company assigns, inter alia, certain tasks to the assessee, including back office operations of a certain kind, in relation to its activities, or that of other group companies or entities;
(ii) The assessee is paid a mark up of 15% of the overall expenditure it incurs, by the overseas company (clause 2, read with attachment 1 of the Service Agreement);
(iii) By the Secondment Agreement, the parties agree that the overseas employee is temporarily loaned to the assessee (Article I read with the Schedule);
(iv) During the period of secondment, the assessee has control over the employee, i.e. it can require the seconded employee to return, and likewise, the employee 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 other perks underscore the fact that the seconded employees are of a certain skill and possess the expertise, which the assessee requires.
50. The above features show that the assessee had operational or functional control over the seconded employees; it was potentially liable for the performance of the tasks assigned to them. That it paid (through reimbursement) the amounts equivalent to the salaries of the seconded employees – because of the obligation of the overseas employer to maintain them on its payroll, has two consequences: one, that the seconded employees continued on the rolls of the overseas employer; two, since they were not performing jobs in relation to that employer’s business, but that of the assessee, the latter had to ultimately bear the burden. There is nothing unusual in this arrangement, given that the seconded employees were performing the tasks relating to the assessee’s activities and not in relation to the overseas employer. To put it differently, it would be unnatural to expect the overseas employer to not seek reimbursement of the employees’ salaries, since they were, for the duration of secondment, not performing tasks in relation to its activities or business.
51. As discussed previously, there is not one single determinative factor, which the courts give primacy to, while deciding whether an arrangement is a contract of service (as the assessee asserts the arrangement to be) or a contract for service. The general drift of cases which have been decided, are in the context of facts, where the employer usually argues that the person claiming to be the employee is an intermediary. This Court has consistently applied one test: substance over form, requiring a close look at the terms of the contract, or the agreements.
52. A vital fact which is to be considered in this case, is that the nature of the overseas group companies business appears to be to secure contracts, which can be performed by its highly trained and skilled personnel. This business is providing certain specialized services (back office, IT, bank related services, inventories, etc.). Taking advantage of the globalized economy, and having regard to locational advantages, the overseas group company enters into agreements with its affiliates or local companies, such as the assessee. The role of the assessee is to optimize the economic edge (be 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 a part of the global policy – of the overseas employer loaning their services, on temporary basis. On the cessation of the secondment period, they have to be repatriated in accordance with a global repatriation policy (of the overseas entity).
54. The letter of understanding between the assessee and the seconded employee nowhere states that the latter would be treated as the former’s employees after the seconded period (which is usually 12-18 months). On the contrary, they revert to their overseas employer and may in fact, be sent elsewhere on secondment. The salary package, with allowances, etc., are all expressed in foreign currency (e.g., US $ 330,000/- per annum in the letter produced before Court, extracted above). Furthermore, the allowances include a separate hardship allowance of 20% of the basic salary for working in India. The monthly housing allowance in the specific case was ` 3,66,700. In addition, an annual utility allowance of ` 3,97,500/- is also assured. These are substantial amounts, and could have been only by resorting to a standardized policy, of the overseas employer.
55. The overall effect of the four agreements entered into by the assessee, at various periods, with NTS or other group companies, clearly points to the fact that the overseas company has a pool of highly skilled employees, who are entitled to a certain salary structure – as well as social security benefits. These employees, having regard to their expertise and specialization, are seconded (a term synonymous with the commonly used term in India, deputation) to the concerned local municipal entity (in this case, the assessee) for the use of their skills. Upon the cessation of the term of secondment, they return to their overseas employer, or are deployed on some other secondment.
56. This Court, upon a review of the previous judgment in Sushilaben Indravadan (supra) held that there no one single determinative test, but that what is applicable is “a conglomerate of all applicable tests taken on the totality of the fact situation in a given case that would ultimately yield, particularly in a complex hybrid situation, whether the contract to be construed is a contract of service or a contract for service. Depending on the fact situation of each case, all the aforesaid factors would not necessarily be relevant, or, if relevant, be given the same weight.”
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 looking at the arrangement is the economic benefit derived by the assessee, which also secures specific jobs or assignments, from the overseas group companies, which result in its revenues. The quid pro quo for the secondment agreement, where the assessee has the benefit of experts for limited periods, is implicit in the overall scheme of things.
59. As regards the question of revenue neutrality is concerned, the assessee’s principal contention was that assuming it is liable, on reverse charge basis, nevertheless, it would be entitled to refund; it is noticeable that the two orders relied on by it (in SRF and Coca Cola) by this Court, merely affirmed the rulings of the CESTAT, without any independent reasoning. Their precedential value is of a limited nature. This Court has been, in the present case, called upon to adjudicate about the nature of the transaction, and whether the incidence of service tax arises by virtue of provision of secondment services. That a particular rate of tax – or no tax, is payable, or that if and when liability arises, the assessee, can through a certain existing arrangement, claim the whole or part of the duty as refund, is an irrelevant detail. The incidence of taxation, is entirely removed from whether, when and to what extent, Parliament chooses to recover the amount.
60. This Court is also of the view, for similar reasons, that the orders of the CESTAT, affirmed by this Court, in Volkswagen and Computer Sciences Corporation, are unreasoned and of no precedential value.
61. In view of the above discussion, it is held that the assessee was, for the relevant period, service recipient of the overseas group company concerned, which can be said to have provided manpower supply service, or a taxable service, for the two different periods in question (in relation to which show cause notices were issued).
17. Applying the principle laid down by the Hon’ble Supreme Court to the present case, we are of the opinion that service tax is applicable on the amount paid by the Appellant to M/s. Tesco, Bangalore for providing manpower during the relevant period April 2008 to March 2013; however, it was also held by the Hon’ble Supreme Court in the aforesaid case that extended period of limitation cannot be invoked and hence, demand has to be computed for the normal period of limitation. Further, since the Appellant had paid the amount of service tax, on being pointed out relating to ITSS service and commercial training and coaching service, before issuance of show-cause notice with interest, we do not see any reason for invoking extended period of limitation against the appellant. Consequently, penalties imposed on all the appellants are unsustainable and accordingly, set aside.
18. In view of the above, the impugned order is modified and the demand and interest relating to Manpower Supply Service is upheld for normal period of limitation and the matter is remanded to the adjudicating authority to redetermine the liability accordingly. Penalty imposed on the Appellant company on all counts are set aside. Also, penalty imposed on individuals are set aside.
19. In the result, appeal ST/20036/2017 filed by the company is disposed of by way of remand to the adjudicating authority and appeals ST/20034/2017 and ST/20035/2017 filed by individuals are allowed.
(Order pronounced in Open Court on 21.02.2025)
