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Vidarbha Iron & Steel Co. Ltd. Versus Commissioner of Central Excise, Nagpur

2015 (8) TMI 593 - CESTAT MUMBAI

Supply of manpower - factory along with the machinery of the appellant was to be given under leave and licence to one company - Whether the amounts received by the appellant towards salary and other government dues are liable to service tax or otherwise under the category of manpower recruitment and supply agency service - Held that:- amounts received by the appellant in this case as actual salaries cannot be considered as an amount received for rendering of manpower recruitment and supply agenc .....

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Member (Judicial) and Mr. Raju, Member (Technical), JJ. For the Petitioner : Shri L. Badrinarayanan, Advocate For the Respondent : Shri J.S. Mishra, Addl. Commissioner (AR) ORDER Per: M.V. Ravindran This appeal is directed against order-in-original number 08/ST/2010/C dated 14 July 2010. 2. The relevant facts that arise for consideration are that appellant herein was an industry, primarily engaged in the business of manufacture of steel ingots. Due to slump in the steel industry the appellant c .....

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utiny of the records by authorities it was noticed that appellant did not discharge service tax liability on an amount received for the salary of employees from FACOR. Accordingly, show cause notice was issued demanding the tax on certain amount along with interest and penalties were sought to be imposed. Appellant contested the show cause notice on merits as well as on limitation. Adjudicating authority after following the due process of law rejected contentions raised by the appellant and conf .....

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igh Court of Allahabad in the case of Computer sciences Corporation India Pvt Ltd.,v. CST, Noida 2014-TIOL-434-CESTAT-DEL. He would produce the copies of the said judgements. 4. Learned Departmental Representative on the other side would submit that as per clause 8 of the leave and licence agreement, the employees of the appellant were to be used by FACOR during the period of leave and licence. He would submit that additional staff if any, were also to be appointed by the appellant on their roll .....

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sides and perused the records. 6. The issue involved in this case is whether the amounts received by the appellant towards salary and other government dues are liable to service tax or otherwise under the category of manpower recruitment and supply agency service. It is undisputed that the amount received by the appellant is nothing but the reimbursement of salaries and other dues of the employees, who were on the muster role of appellant, as per the compromise scheme approved by High Court amo .....

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e salaries is not taxable. 6.2 In our considered view, the stand of the adjudicating authority holding that the service tax liability arises is incorrect for more than one reason. Firstly, we find that clause 8 of the leave and licence agreement specifically states that the employees will be on the muster roll of the appellant and salaries to be paid by the appellant on receipt from FACOR. It is undisputed that the appellant had received only the actual dues towards the employees. Secondly, the .....

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utation of personnel to the FACOR. This issue is now squarely covered by the judgement of Honourable High Court of Gujarat in the case of Arvind Mills (supra). The entire judgement is reproduced. 1. Revenue is in appeal against the judgment of the Customs Excise & Service Tax Appellate Tribunal (the Tribunal for short) dated 26.7.2013 raising following questions for our consideration:- (a) Whether in the fact and the circumstances of the case the Hon ble CESTAT has erred in applying the rati .....

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nd circumstances of the case whether the service rendered by the respondent is a taxable activity attracting Service Tax? 2. Issue in brief is whether the respondent is a Manpower Supply Recruitment Agency. Definition of the said term applicable at the relevant time reads as under:- Manpower recruitment or supply agency means any commercial concern engaged in providing any service directly or indirectly, in any manner for recruitment or supply of manpower, temporary or otherwise to a client. 3. .....

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utside its own subsidiary companies. The Tribunal also recorded that undisputedly the employees deputed do not work exclusively under the direction or supervision of the subsidiary company and upon completion of the work they were repatriated to the respondent company. On such basis, the Tribunal held that the respondent cannot be said to be Manpower Supply Recruitment Agency and, therefore, not exigible to service tax. 4. Counsel for the Revenue vehemently contended that the definition of Manpo .....

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ithin its sweep range of activities provided therein. However, in the present case, such definition would not cover the activity of the respondent as rightly held by the Tribunal. To recall, the respondent in order to reduce his cost of manufacturing, deputed some of its staff to its subsidiaries or group companies for stipulated work or limited period. All throughout the control and supervision remained with the respondent. As pointed out by the respondent, company is not in the business of pro .....

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vision or control of subsidiary company. All throughout he would be under the continuous control and direction of the company. 6. We have to examine the definition of Manpower Supply Recruitment Agency in background of such undisputable facts. The definition though provides that Manpower Recruitment Supply Agency means any commercial concern engaged in providing any services directly or indirectly in any manner for recruitment or supply of manpower temporarily or otherwise to a client, in the pr .....

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o the contrary. 7. In the result, no question of law arises. Tax Appeal is dismissed. 6.3 We also find that High Court of Allahabad in the case of computer sciences Corporation (supra) in paragraph number 7 and 8 held as under. 7. In order to be a taxable service within the meaning of Section 65 (105) (K), the service must meet the following requirements: (i) there has to be a service provided or to be provided to any person; (ii) the service has to be provided by a manpower recruitment or suppl .....

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