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2015 (5) TMI 704

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..... appellant in USA, which would mean that the appellant discharge his obligation towards employees who are working with them. - Further reading of clause No. 4 specifically indicates that sole obligation of Lear Corporation, USA is to depute employees and the said obligation would cease on actual deputation of the employees to Lear India and it is specifically mentioned in the said agreement that Lear Corporation, USA is not providing any services to Lear India by deputing the employees. The same clause also talks about the deputed personnel will be taken into employment by the appellant/assessee and shall work under direct Control and Management of the appellant/assessee during the entire period of their employment and; that the deputed emp .....

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..... cuments, it appeared to department that part of such reimbursement was towards salary of some employees of the said associated company then working for the assessee/appellant in India. After considering the reply to the audit party's query, departmental officers felt that the transaction between Lear Corporation, USA and the services of appellant/assessee would fall under the category of manpower recruitment or supply agency services and by reverse charge mechanism, the appellant/assessee is liable to discharge the service tax liability. Coming to such conclusion, a show-cause notice was issued demanding service tax liability, interest thereof and proposing to impose penalty. The appellant/assessee contested the issue on merits as wel .....

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..... Corporation India Pvt. Ltd. vs. CST - 2014 (35) STR 94 (Tri-Del) was held in favour of the assessee. He would submit that the Revenue aggrieved by the order of the Tribunal preferred an appeal before the Hon'ble High Court of Allahabad and the same was also dismissed by the Hon'ble High Court. He would also rely upon the decision of the Tribunal in the case of Arvind Mills Ltd., vs. CST - 2014 (34) S.T.R. 610 (Tri. - Ahmd.) wherein -Arvind Mills Ltd. had deputed various employees to their own group companies for functioning as the employees of the group companies. It is his submission that the said case, the view was held in favour of the assessee as their activity would not fall under the category of Manpower Recruitment or Supp .....

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..... that the amounts which are paid by the appellant to Lear Corporation, USA are reimbursement of amounts paid by Lear Corporation, USA to the Government therein towards the social security funds of the employees who are deputed to Lear India, the appellant herein. 5.2 The adjudicating authority has held that the services rendered by Lear Corporation, USA would fall under the category of Manpower Recruitment or Supply Agency Services . The reasoning given by the adjudicating authority is that the employees of Lear Corporation, USA are sent on deputation to Lear India and the transaction of reimbursement of Lear Corporation, USA could not have taken place, if the relationship between the assessee and the employees of the employer, the emplo .....

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..... y services to Lear India by deputing the employees. The same clause also talks about the deputed personnel will be taken into employment by the appellant/assessee and shall work under direct Control and Management of the appellant/assessee during the entire period of their employment and; that the deputed employees will be proceeded against in terms of the disciplinary issues on the same terms as the appellant/assessee's own employees. In short, we find that entire agreement, on which reliance has been placed by the Counsel of the appellant indicates that the personnel who are deputed to India are taken on rolls as employees of the appellant/assessee. If that be so, the question of rendering any services to the appellant by Lear Corpora .....

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..... diction. There was no basis whatsoever to hold that in such a transaction, a taxable service involving the recruitment or supply of manpower was provided by a manpower recruitment or supply agency. Unless the critical requirements of clause (k) of Section 65(105) are fulfilled, the element of taxability would not arise . 5.6 It can be seen that on an identical issue, the Hon'ble High Court of Allahabad has held that the services rendered cannot be classified as Manpower Recruitment and Supply Agency Services . In view of the foregoing, we hold that the impugned order is unsustainable and liable to be set aside. 6. We set aside the impugned order and allow the appeal with consequential relief, if any. (Pronounced in Court) - .....

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