TMI Blog2017 (6) TMI 1028X X X X Extracts X X X X X X X X Extracts X X X X ..... anese company, undertaking the project work in India. As such, we hold that the appellants are covered by the provisions of Section 66A for any tax liability, on reverse charge basis, when such taxable services were received from outside India. The deputation of employees within the company cannot be considered as supply of manpower. Further, the Japanese company is not shown to have been engaged in the activity of manpower recruitment or supply services. In these factual situations, we find that the liability of the appellant on such tax entry cannot be held as legally sustainable. Determination of consideration for taxable services - amount debited to the books of accounts - Held that:- The transaction in the present case is not bet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvice tax on reverse charge basis in terms of Section 66 A of the Finance Act, 1994 in respect of the considerations shown as debit entries in the branch office (appellants ) account in India. The demand notice was adjudicated resulting in the impugned order. The original authority held that the appellants did receive taxable service under the category of manpower recruitment and supply service from their head office and the consideration shown as a debit in the books of account is liable to be taxed. A service Tax demands of ₹ 48,39,807/- and ₹ 38,84,953/- were confirmed against the appellant. Penalties under Section 76 and 77 were also imposed on them. 3. The ld. Counsel elaborated the grounds of appeal contesting the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd carrying on business activities. In such situation, they are recognized for tax liability in terms of Section 66A. Regarding the consideration for tax liability, it is the contention of the ld. A.R. that once the appellants are held to the covered under the Section 66A, debit entries carried in the books is to be considered as a gross amount charged in terms of Section 67 sub- Section 2, Explanation (c). The transaction between branch office and head office is very much covered by such tax liability and the deeming provisions of Section 66 A as well as gross amount charged should be applied. 5. We have heard both the sides and perused the appeal records. The only point of dispute is whether or not the appellants are liable to pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company cannot be considered as supply of manpower. Further, the Japanese company is not shown to have been engaged in the activity of manpower recruitment or supply services. In these factual situations, we find that the liability of the appellant on such tax entry cannot be held as legally sustainable. In this connection, we also refer to the decision of the Tribunal in Airbus Group India Pvt. Ltd. 2016 (45) S.T.R. 120 (Del.) . The relevant portion of the decision is reproduced below:- 6. The second point of dispute regarding service tax liability of the appellant, again on reverse charge basis, under the category of manpower recruitment and supply agency service , we find that the other parties of the agreement located abroad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ployees and having employee-employer relationship there is no supply of manpower service and no tax liability arises. 7. The original authority relied on the provisions of Section 67 (2) Explanation- (c) to hold that the gross amount debited in the accounts of the appellant should be considered as a consideration for receiving taxable service. We find that the said explanation talks about debit entries, deduction from account in any manner, is to be considered as a gross amount charged , where the transaction of taxable service is with any associated enterprise. We find that the transaction in the present case is not between two associated enterprises. There is nothing on the record to indicate that the branch project office in India ..... X X X X Extracts X X X X X X X X Extracts X X X X
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