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2010 (3) TMI 190 - AT - Service TaxManpower recruitment or supply agency- The appellant had entered into agreements with TCS and Infosys, two renowned IT Companies. The Commissioner found that the employees of the appellant performed the services at customers premises as per the requirements and directions of TCS and Infosys; that the role of appellant was limited to supply of skilled manpower to TCS and Infosys; that per se, appellant had not undertaken any software development in its own premises and that appellant had no control whatsoever, on the technical nature of activities carried out by its employees. The Commissioner therefore took the view that services rendered by the appellant were in the nature of ‘manpower supply’. The Commissioner had, thus, raised demands for service tax for the relevant period with interest, and penalties under section 76 and 78. In instant appeal, the contention of the appellant was that it rendered information technology software service to its clients, and during the period covered in the proceedings, services rendered in the field of software development did not attract service tax. The appellant further contended that since the practice was adopted and because of adoption of such mode for charging the clients, it was not correct to hold the services rendered as amounting to mere ‘manpower supply’ and charge service tax accordingly. Held that- the appellant was supplying skilled manpower for which it was liable to pay service tax for supply of manpower services. Thus demand, interest and penalty u/s 76 confirmed. But penalty imposed u/s 78 is liable to be set aside.
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