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2015 (11) TMI 1355 - CESTAT BANGALORE

2015 (11) TMI 1355 - CESTAT BANGALORE - TMI - Waiver of pre deposit - Manpower Supply service - centralized group company providing various services to other group company - MPCMS is providing personnel to MFL and other group companies - Held that:- According to the agreement between MPCMS and MFL in under terms and conditions, it is provided that MPCMS shall provide necessary personnel to the first party for its day-to-day operation and shall supervise and manage them as required by the law. Th .....

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some cases service has been provided free, we consider that if the appellant deposits an amount of ₹ 5,00,00,000/- (Rupees Five Crores only) which is much less than the demand for the normal period plus interest and less than 10% of the total demand involving service tax, interest and penalty - Partial stay granted. - ST/Stay/22642/2014, ST/Stay/22645/2014 in ST/22293/2014-DB, ST/22296/2014-DB - Stay Order Nos: 20841-20842 / 2015 - Dated:- 28-4-2015 - Mrs. Archana Wadhwa, Judicial Member A .....

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d. The appellant (MPCMS) was formed as a core group to manage various establishments of the group. The firm is the central management establishment of MPG and provides advice and consultancy in areas like finance, legal, personnel, technical etc as emerging from the Partnership Deed. MPCMS also has control over entire manpower of group companies. While MPCMS provided such services to all the entities, they had a separate agreement with MFL which provided for payment of administrative charges for .....

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r ₹ 5,14,95,847/- (Rupees Five Crores Fourteen Lakhs Ninety Five Thousand Eight Hundred and Forty Seven only) for 2012-13 have been confirmed with interest. In addition penalties under Section 77 and 78 of Finance Act 1994 have also been imposed. 2. The case of the department briefly is as under: MPCMS (appellant) supplies personnel to MFL and other group companies, but under their terms and conditions, and also under their supervision. For recruitment or supply of manpower, what is releva .....

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organizations that make available their staff to other entities would be covered under the definition of manpower supply and the motive for providing such manpower is of no consequence. MPCMS and the group companies to whom they are supplying manpower are different legal entities and the activity cannot be termed as service to self. RPG Enterprise Ltd. v. CCE, Mumbai IV - 2008 (11) STR 488 3. The learned counsel on behalf of the appellant made the following submissions: A. Organizational set up .....

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of the MPG that provides advice and consultancy in areas like finance, legal, personnel, technical etc. The establishment of MPCMS also to ensures uniformity in labour compliance and recruitment in MPG. The Labour Department of the Govt. of Kerala has issued Standing Orders for MPCMS which is also applicable to the sister concerns and branch offices of MPG establishments. While MPCMS provided such all encompassing services, to all the entities indicated above, they had a separate agreement with .....

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ills Ltd. reported in 2014-TIOL-441-HC-AHM-ST Persons who get recruited, work for MPG as one employer and are liable to be transferred from one entity to another. MPCMS coordinates the recruitment, placement, training and several other matters. This ensured a large employment base of the MPG and thus better labor incentives for the employees. MPCMS is an association of the group companies who come together to work for and among themselves and for the benefit of MPG. The activities of MPCMS was m .....

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uitment is given by the MPG company which is currently looking for employees. Employment ID cards are also issued by the respective MPG company. MPCMS merely maintains the payroll and disburses salary as it is required to mandatorily do so as per the Certified Standing Orders. In contradistinction to the Circular No. B1/6/2005-TRU dated 27.07.2005 and Master Circular No. 96/7/2007-ST dated 23.08.2008, in the present case, the employer-employee relationship exists only between the MPG company and .....

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is more in the nature of a pure agent since the other entities, employees and personnel of the MPG know that MPCMS acts as a co-ordinating agent only. Reliance is placed on the following case laws: Indian Hotels Co. Ltd. V. CST, Mumbai-I, 2015-TIOL-298-CESTAT-MUM Commissioner of Service Tax V. M/s. Arvind Mills Ltd. reported in 2014-TIOL-441-HC-AHM-ST Only with respect to M/s. Muthoot Fincorp Ltd., the appellant has entered into an Agreement to co-ordinate the recruitment of employees for an add .....

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40,00,000/- (Rupees Ten Crores Forty Lakhs only) for the period 2007-13. Administrative charges paid within normal period of limitation (2011-13) is only ₹ 2,40,00,000/- (Rupees Two Crores Forty Lakhs only) and the service tax liability (if there arises any) would be only ₹ 24,00,000/- (Rupees Twenty Four Lakhs only). E. The entire exercise of demanding tax is revenue neutral The MPG companies are registered service tax paying entities. Therefore, even if tax were to be paid by the a .....

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rores Four Lakhs Ninety Nine Thousand Seven Hundred and Thirty Nine only). Out of this only ₹ 5,54,89,484/-(Rupees Five Crores Fifty Four Lakhs Eighty Nine Thousand Four Hundred and Eighty Four only) was paid through credit and the rest was paid through cash. Had the appellant paid service tax, around 27 crores would be available as credit for the MPG companies and the remaining service tax liability of the MPG companies paid through cash, i.e. ₹ 10,65,01,370/- (Rupees Ten Crores Six .....

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d. 4. On the other hand learned AR would submit that according to the agreement, the manpower is to be supplied by MPCMS, MFL and they are required to pay not only the wages of the employees but also administrative charges to MPCMS. He draws our attention to specific provisions in the contract to show that the agreement clearly provides for manpower supply and other services by MPCMS to MFL and therefore the stand taken by the Revenue that appellant is liable to pay service tax under the categor .....

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n] engaged in providing any service, directly or indirectly, in any manner for recruitment or supply of manpower, temporarily or otherwise, 71[to any other person] According to the agreement between MPCMS and MFL in para 3 under terms and conditions, it is provided that MPCMS shall provide necessary personnel to the first party for its day-to-day operation and shall supervise and manage them as required by the law. The personnel will be considered and treated as employees of MPCMS and MFL shall .....

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