Home Case Index All Cases Service Tax Service Tax + AT Service Tax - 2023 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (7) TMI 482 - AT - Service TaxManpower Recruitment and Supply Services - supply of skilled manpower - sharing of services of their corporate staff with the Sanmar group of companies - whether payment of proportional cost of salaries of these staff borne by the respective companies to the respondent can be stated to be a ‘consideration’ as per Explanation (a) to Section 67 of the FA 1994 or has to be treated as ‘reimbursement’ and not taxable in the light of the Hon’ble High Court of Delhi’s judgment in the case of Intercontinental Consultant [2012 (12) TMI 150 - DELHI HIGH COURT] - SCN hit by limitation of time or not. Exigiblity of the activity of sharing services of their corporate staff with group companies under the definition of manpower recruitment or supply agent - HELD THAT:- It is seen from the statute as it stood during the major part of the impugned period, which was from, April 2008 to January 2011, that there were two important changes made to the definition of “Manpower recruitment or supply agency”, altering its earlier scope. These changes signify the legislative intent to broaden the scope of the definition and to bring in an inclusive definition which is very broad from that of a narrower and more specific one. After these changes in the section, there can be no further ambiguity that the respondent action in deploying staff to its group companies was covered by it. It is hence concluded that the respondent sharing services of their corporate staff with the Sanmar group of companies is covered by the definition of ‘manpower recruitment or supply agency’ as defined in Section 65(105)(k) of FA, 1994 read with section 65(68) ibid. Whether the payment of proportional cost of salaries of the staff borne by the respective companies to the respondent can be stated to be a ‘consideration’? - HELD THAT:- A plain reading of Section 67 indicates that service tax is leviable only on the amount received as a ‘consideration’ for the services provided or to be provided which would form part of taxable value for the purpose of service tax during the relevant time - The term ‘consideration’ as defined in the section includes ‘any amount’ that is payable for the taxable services provided or to be provided which is broad enough to include payments labelled as ‘reimbursement’ under its fold. Once a nexus between the provision of service and payment is evident and it is determined that service has been provided in terms of the definition of the impugned service and payments made toward it are received from time to time, then the payments labelled as ‘reimbursement’ come under the definition of ‘consideration’. The respondent does not deny this nexus but states that they have produced a Chartered Accountant’s certificate before the adjudicating authority wherein it has been certified that what is received from the group company during the relevant period is only towards the reimbursement of actual expenses and there was no mark-up. Hence there is no consideration received so as to attract service tax. Attention invited to the Hon’ble High Court of Delhi’s judgment in the case of Intercontinental Consultant and Technocrats Pt Ltd [2012 (12) TMI 150 - DELHI HIGH COURT] which struck down Rule 5(1) of the Service Tax (Determination of Value) Rules, 2006 that attempted to tax reimbursement, on the ground that it is in conflict with Section 67 provides for inclusion of expenses reimbursed. Revenues appeal was dismissed by the Hon’ble Supreme Court in Union of India vs Intercontinental Consultant and Technocrats Pvt Ltd [2018 (3) TMI 357 - SUPREME COURT]. In Desh Bandhu Gupta and Ors v. Delhi Stock Exchange [1979 (2) TMI 175 - SUPREME COURT] the Apex Court held that this principle can be invoked, though the same will not always be decisive on the question of construction. But the contemporaneous construction placed by administrative or executive officers charged with executing the statute, although not controlling, is nevertheless entitled to considerable weight as highly persuasive. To this effect the circular makes it clear that the motive for providing such manpower is of no consequence. The requirement for taxability is that the person should be engaged in an activity that is covered under Section 65(105)(k) ibid. The volume of activity undertaken or the presence or absence of the profit motive is irrelevant. There are no merits in treating ‘consideration’ as a ‘reimbursement’ which is not exigible to tax - the impugned order has erred in its conclusion and the respondent does not have a case on merits. Whether the show cause notice is hit by the limitation of time? - HELD THAT:- The extended period in terms of proviso to Section 73 (1) can be invoked only when there is fraud, collusion, wilful misstatement, suppression of facts, contravention of any of the provisions of this Chapter or of the Rules made there under with intent to evade payment of service tax. The Show Cause Notice is time barred, as none of the ingredients that are required for invoking the extended period of 5 years are present. It has been held by courts that appellate bodies should be mindful of the first-hand knowledge of the original authority and the position that he holds to assess the facts and the credibility of circumstances from his own observations. Even if a superior appellate body feels that another view is possible, that is no ground for substitution of the original authorities view with one’s own by exercising its appellate jurisdiction. The exception would be if the impugned order is demonstrably found as not being rational or reasonable or is suffering from procedural impropriety which is not the case here - the SCN has been issued correctly under the extended period of time. Ahe appeal succeeds both on merits and on the show cause notice not being hit by the limitation of time.
|