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M/s. Johnson & Johnson Pvt. Ltd. Versus Commissioner, CE & ST (LTU) , Mumbai

2016 (11) TMI 110 - CESTAT MUMBAI

Manpower Recruitment or Supply Agency services - it was contended that, SBL is a distributor of their goods and is employing these staff on behalf of the appellant to promote the sale of J&J range of products. - Held that: - the agreement with SBL is not an agreement of service provision but it is an agreement involving only reimbursement - The decision of Hon'ble High Court of Gujarat in Arvind Mills Ltd. 2014 [2014 (4) TMI 132 - GUJARAT HIGH COURT] applies - SBL is not engaged in the business .....

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ific software would be classified as Information Technology software - service tax can only be demanded on the service received w.e.f. 16.05.2008 - Decided partly in favor assessee. - Appeal No. ST/335/12 - A/93195/16/STB - Dated:- 19-10-2016 - Shri M.V. Ravindran, Member (Judicial) And Shri Raju, Member (Technical) Shri Rohan Shah, Advocate with Shri Anay Banhatti and Suprema Kothari, Advocate for the appellant Shri A. B. Kulgod, AC (AR) for the respondent ORDER Per Raju The appellants were iss .....

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Service 22.05.2006 to 18.12.2008 2. Manpower Recruitment or Supply Agency services 06.08.2006 to 18.09.2009 3. Management or Business Consultancy services 31.07.2007 to 09.01.2009 4. Management, Maintenance or Repair services 06.05.2005 to 30.05.2008 5. Video Tape production services 05.03.2007 to 12.04.2007 6. Internet Telecommunication service 05.01.2007 to 20.05.2008 7. Commercial Training & Coaching Service 08.04.2005 to 05.05.2008 8. Sponsorship services 18.07.2007 In respect of sr.no. .....

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s exchanged between them and DGCI. Ld. counsel argued that it was for this period that these demands pertain. He argued that they have discharged the liability before issue of show-cause notice and in this case penalty should not be imposed. He argued that since the period for which demands have been raised, is same period during which investigation were conducted there cannot be a case for suppression etc. He would argue that they have discharged the entire amount of duty demanded before issue .....

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luding the salary and related expenditure of this staff was reimbursed by J&J on monthly basis. The said clause of the agreement reads as follows: SBL to maintain the required number of staff in their payroll to promote and market the J&J range of products and such costs including the salary and related expenditure will be reimbursed by J&J on a monthly basis. In the event of the agreement being terminated due to justifiable causes, J&J to compensate the staff of SBL adequately. .....

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imbursed to SBL and therefore it can be considered as reimbursement of expenditure and not provision of service. Ld. counsel relied on the decision of the Hon'ble High Court of Gujarat in Arvind Mills Ltd. 2014 (35) STR 496 (Guj). Para 5 of the decision reads as follows:- 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 .....

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ation and perquisites is only reimbursed by the group companies. There is no element of profit or finance benefit. The subsidiary companies cannot be said to be their clients. Deputation of the employees was only for and in the interest of 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 dire .....

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ement, Maintenance or Repair services, ld. counsel argued that there are six invoices involved in respect of this demand. He argued that they have paid the tax in respect of one invoice which has been issued after 16.05.2008 which they are contesting. He argued that prior to 16.05.2008 no demand can be made on them under the said service. He argued that the said service was maintenance and repair of software and information technology. Maintenance or repair of Software was introduced under Secti .....

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e or repair including reconditioning or restoration, or servicing of any goods or equipment, excluding motor vehicle; or (b) maintenance or management of immovable property; After 01.05.2006 the definition became as follows:- (64) management, maintenance or repair means any service provided by (i) any person under a contract or an agreement; or (ii) a manufacturer or any person authorised by him, in relation to, (a) management of properties, whether immovable or not; (b) maintenance or repair of .....

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w.e.f. 16.05.2008 which reads as under:- Explanation For the removal of doubts, it is hereby declared that for the purposes of this clause, (a) goods includes computer software; (b) properties includes information technology software; Ld. counsel argued that only w.e.f. 16.05.2008 can service tax be demanded on the services provided by them. Ld. counsel relied on the decision of the Tribunal in Persistent System Ltd. 2016 (42) STR 890. In the said decision of the Tribunal a distinction has been .....

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hich demands have been raised is the same is during which there were investigation by the revenue. He argued that in these circumstances, extended period cannot be invoked and penalty should not be imposed as the entire activity was during that period in investigation by the revenue. 8. Ld. AR relied on the impugned order. 9. We have gone through the rival submissions. We find that the investigations into the appellant s activity started with issue of summons dated 27.09.2006. It is seen that th .....

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(3) of section 73. In these cases, since liability itself arises while the case was being investigated by the revenue, no charge of suppression can be invoked. 10. In respect of sr.no. 1 and 7, it is seen that the liability for service tax arose before the investigation started. In these circumstances, it cannot be said that there was no suppression or misdeclaration. The fact that part of the period for which demand is made is same as the duration of investigation does not make any difference. .....

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nsel has also relied on the decision of Arvind Mills Ltd. (supra) wherein the Tribunal has held as follows:- 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 s .....

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lients. Deputation of the employees was only for and in the interest of 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. 12. We find that the facts of the case in the decision of the Hon'ble High Court of Ahmedabad in Arvind Mills Ltd. (supra) are similar to the .....

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