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Krohne Marshall Pvt. Ltd. Versus Commissioner of Central Excise, Pune I

2015 (10) TMI 2459 - CESTAT MUMBAI

Deputation of employees to group company - Manpower Supply Recruitment Agency Service - Appellant contends that employees were and are kept informed that their services may be utilised for any of organisation in group companies and salary paid by them to deputed employees is only amount collected by them from group companies which is reimbursement of actual expenses - Held That:- Since, various group companies make salary payment to appellant on actual basis to deputed employees thus contention .....

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t. It is true that the definition is wide and would include any such activity where it is carried out either directly or indirectly supplying recruitment or manpower temporarily or otherwise. However, fundamentally recruitment of the agency being a commercial concern engaged in providing any such service to client would have to be satisfied - Decided in favour of assessee. - APPEAL NO: ST/476/2010 - order no. A/2503/15 - Dated:- 22-7-2015 - Shri M V Ravindran, Member (Judicial) And Shri C J Math .....

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ies like Consulting Engineer s Service, Maintenance and Repair Service, Erection, Commissioning and Installation Services, Management Consultants Services, Business Auxiliary Service and Works Contract Service. Appellant herein is a part of the group company of Forbes Marshall Ltd. Employees of the appellant are deputed to various group companies for functioning/discharging their duties. As and when the employees are deputed to group companies, appellant herein gets paid the reimbursement of the .....

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ellant contested the show cause notice on merits in respect of Manpower Recruitment and Supply Agency Service while in the case of Business Auxiliary Service they discharged the service tax liability along with interest, which was due to inadvertent error, but contested the penalty on such an amount. 3. The adjudicating authority after following due process of law, confirmed the demand of service tax liability along with interest and also imposed penalties. The adjudicating authority appropr .....

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f such employees. It is also his submission that the employees were and are kept informed that their services may be utilised for any of the organisation in the group companies. He would submit that the salary which has to be paid by the appellant to the deputed employees is the only amount collected by them from the group companies which is reimbursement of the actual expenses. He would submit that this issue is now decided by the Hon ble High Court of Gujarat in the case of Commissioner of Ser .....

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o various concerns are functioning as an employee of the appellant. He would submit that this would amount to Manpower Recruitment and Supply Agency Service though the appellant is claiming that the amount which is received by them from the group companies is only the actual salary paid to the employees. 6. We have considered the submissions made at length by both the sides and perused the records. The undisputed fact is that the appellant is one of the group companies of Forbes Marshall. It is .....

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entical issue was before the Hon ble High Court of Gujarat in the case of Arvind Mills Ltd. (supra). The Hon ble High Court, after considering all the submissions, held that such deputation of employees would not amount to manpower recruitment and supply agency services. We reproduces the entire judgment below: 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 fo .....

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ed in C168 of S.65 of the Finance Act 1994 R/w. C1 105 (k), thus the respondent is liable for the Service Tax? (c) Whether in the facts and 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 .....

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ising for a limited period. The Tribunal recorded that there was no allegation of finding that the respondent had deputed employees to any other concerns outside 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 M .....

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endment, the definition was widened. 5. It is true that in the present form, the definition of Manpower Supply Recruitment Agency is wide and would cover within 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 limit .....

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the company. There was no relation of agency and client. It was pointed out that the employee deputed did not exclusively work under the direction of supervision 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 e .....

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