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2013 (12) TMI 800 - AT - Service TaxDemand for service tax - Manpower supply services - Penalty u/s 77 and 78 - Difference between 'manpower recruitment service’ and ‘manpower supply service’ - Held that:- There is an essential difference between ‘manpower recruitment service’ and ‘manpower supply service’. In the case of MRS, a specific number of persons are sent by the recruiting agency to the service receiver who selects a person or persons depending upon the requirement and pays the service charges to the recruitment agency and the service ends there. The persons recruited by the service receiver become the employees of the service receiver and thereafter the service provider need not and will not have any relationship with the persons whom he has sent. On the other hand, in the case of MSS, the service receiver requests for a number of men or women as the case may be with requisite qualification and once they are sent, the service receiver may choose and select or may simply accept the persons sent by the service provider but the responsibility for the performance of these persons and payment of salaries to them and other obligations which are required to be met by the employer will be with the service provider only. There is no obligation to show reasons as to why the persons were sent back. Further there is no connection between the persons sent by the appellant and the organizations because the salaries are being paid by the appellant and not by the service receiver. The service receiver simply pays the amount to the appellant adding a commission due to the appellant. This is nothing but MSS and it is difficult to accept that this is MRS. Only when the service recipient has an obligation legal or contractual to pay certain amount to any third party and the said amount is paid by the service provider on behalf of the service recipient, the question of reimbursing the expenses incurred on behalf of the recipient shall arise - cost of input services and inputs used in rendering service cannot be treated as reimbursable cost. In the case of MSS, manpower is the input and just because it is separately charged, it cannot be treated as reimbursable expenditure - appellant failed to make out a prima facie case on merits - Decided against assessee.
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