TMI Blog2018 (2) TMI 1407X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts of the appellant, though the same is accrued to LIL, Canada has suffered tax under the category of consultancy engineering service. An expenditure, which is part of the same accounting for income, cannot be taxed for the same service, even under reverse charge tax. Secondly, the appellant has no agreement or arrangement with LIL, Canada to receive any consultancy service. No such allegation has been made. LIL, Canada apparently, procured such consultancy service from various consultants, which in turn were used for rendering service to Indian clients. In fact, such services were effectively managed and utilized by LIL, Canada. This is expenditure for LIL, Canada, which is also reflected in the appellant’s accounts as per the requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d into various agreements with clients based in India for providing engineering consultancy services and technical assistance in various road related projects. The appellant have a small establishment in India, and are registered with the Department for discharging tax liability on considerations which are accruing to LIL in terms of the said agreements with Indian clients. The dispute in the present appeal relates to the liability of the appellant for service tax on 2 counts:- (a) Certain expenditure shown in the books of the appellant with reference to income and expenditure of projects in India is sought to be taxed as a consideration for consulting engineer service (b) Tax liability under manpower supply in respect of staff de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts for Indian operations in terms of income tax law. 4. The considerations received from Indian clients in pursuance of various consultancy agreements are fully credited to LIL, Canada directly. The appellant has no role in execution of the agreement, rendering of service or receipt of consideration for such service. The full consideration, which is accounted towards the receipt from Indian clients are shown in their accounts in India, which is also captured in the accounts of LIL, Canada. This accounting is followed mainly to satisfy the local Income tax law for tax liability. For Service Tax purpose, they are neither rendering any service nor received any consideration towards such service. Since, they have discharged Service Tax as ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y service. This is independent of the tax liability suffered by the appellant. 7. We have heard both the sides and perused the appeal records. On the first point, we note that the appellants paid Service Tax on the full consideration shown to have been paid by the Indian service recipient to LIL, Canada, which is captured in the accounts of the appellant and further adjusted in the accounts of LIL, Canada. This fact has not been disputed. In fact, this is recorded in the show cause notice that the income which is shown in the accounts of the appellants were subject to Service Tax as consultancy engineering service. However, certain expenditure shown in the same books of accounts under the category of consultancy fee and technical fee, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Corporation India Pvt. Ltd. - 2014-TIOL-1896 (H.C.- All.-ST). The Hon ble Allahabad High Court held that in such arrangement, the deputation of employee for executing work cannot be considered as a manpower supply. It was held that the employer cannot be considered as a manpower supply agency. The said ratio has been adopted in various other decisions of the Tribunal also. We note, neither the appellant nor LIL, Canada can be considered as a manpower supply agency. In such situation, the tax liability to said category cannot be sustained. 8. In view of the above discussion and analysis, we find the impugned order is not legally sustainable. Accordingly, the same is set aside. The appeal is allowed with consequential benefit. [Dic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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