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2020 (3) TMI 315

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..... e agreement entered by the appellant with M/s. WTI it is very much clear that activity falls within the four corners of Manpower Recruitment and Supply Agency Service. The demand is legal and proper - appeal dismissed - decided against appellant. - Service Tax Appeal No. 41151 of 2013 - FINAL ORDER NO. 40679/2020 - Dated:- 3-3-2020 - HON BLE MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL) AND HON BLE MR. ANIL G. SHAKKARWAR, MEMBER (TECHNICAL) Shri. N. Viswanathan, Advocate for the Appellant Shri. L. Nandakumar, Authorized Representative (A.R.) for the Respondent ORDER Per: Hon ble Ms. Sulekha Beevi C.S. Brief facts are that the appellants are registered with the Service Tax Department for providing Commercial Training and Coaching Service, Business Support Service, etc. They had entered into an agreement with M/s. WTI Advanced Technology Ltd. ( M/s. WTI for short) by which it was agreed that the appellants would offer the services of its selected employees to work on the projects identified and allocated by M/s. WTI to carry out such functions and project related activities as allocated by M/s. WTI from time to time. 2. The Department was of the vie .....

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..... Services. 3.4 It is also argued by the Learned Counsel that the Show Cause Notice issued is not maintainable as the same did not allege that the activities of the appellant involved supply of manpower which involves work under the control of M/s. WTI. The said category of taxable service would be applicable only if the employees worked under the control of M/s. WTI. As the Notice does not allege that the employees worked under the control and supervision of M/s. WTI, the demand under the category of Manpower Recruitment and Supply Agency Service cannot sustain. 3.5 Further, that the reliance placed by the Commissioner (Appeals) on the decision of the Tribunal rendered in M/s. Future Focus Infotech India (P) Ltd. v. Commissioner of Service Tax, Chennai reported in 2010 (18) S.T.R. 308 (Tri. Chennai) is incorrect as the facts do not apply to this case. 3.6 He prayed that the demand may be set aside. 4.1 Learned Authorized Representative Shri. L. Nandakumar appeared and argued the matter on behalf of the Department. He supported the findings in the impugned order. He adverted to the contract entered between the appellant and M/s. WTI to contend that from the terms o .....

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..... lling to provide on subcontract basis technical assistance in respect of computer application software system development, implementation and maintenance work undertaken by WTI from its various clients by deputing its Employees to WTI/WTI Client locations to work on the project along with WTI Project team. . . . 3. SCOPE OF BA ACTIVITIES: As WTI Business Associate, BA shall engage in the following activities with due diligence; a) Upon the request of WTI, BA will offer the technical assistance to WTI through services of its selected Employees to work on the computer software application development, implementation and maintenance of specific projects to be identified and allocated by WTI at its sole and absolute discretion and to carry out such functions and project related activities as may be allocated by WTI from time to time on a fixed man month (consisting of all days in a month excluding weekly offs and holidays declared by WTI or its Clients) fee basis as hereunder agreed under overall guidance and supervision of WTI, as per terms of this agreement. b) BA and its Employees on the project will perform all activities commonly known and referr .....

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..... ployees as and when called upon to do so by WTI. However in case of BA Employees sent on Overseas deputation, BA shall provide this said information in the prescribed form every month. . . 6.7. WTI shall have the right to withhold payment under the following circumstances, (a) If, upon a request by WTI, BA has not replaced any Employee(s) within a period of fifteen (15) days from such request having been made, which Employee(s) is (are), in the sole discretion of WTI, incapable of performing the functions assigned to him/her/them by the WTI Project Leader and/or is otherwise considered by WTI in its sole discretion to be replaced for whatsoever reason. (b) If, BA has not replaced the Employee(s) who has become incapable of performing the obligations of BA under the terms of this agreement, such incapability arising due to death, disease, resignation or by whatsoever means, within a period of fifteen days from such incapability. (Emphasis added) 7.2 From the above excerpts of the contract, it can be safely concluded that the nature of the contract is for supply of manpower. The consideration is paid on the basis of man-hours. It can also be seen th .....

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..... in the light that TCS and Infosys are merely seeking to obtain personnel from the appellants with necessary skill who will work diligently on the projects undertaken by TCS and Infosys. 14. The learned special counsel for the Department has rightly pointed out a significant provision in the contracts which require the appellants to replace personnel who leave the job by suitably trained personnel as substitutes. Such provisions in the contract go to show that the number of skilled persons supplied is important from the point of view of TCS and Infosys. If the appellants were actually to deliver the software projects, TCS and Infosys would have nothing to say about how many personnel the appellants engage to complete the project or who they employ. 15. Looking at all aspects of the case and taking into account all the arguments made before us, we come to the conclusion that the appellants are only supplying skilled manpower for which they are liable to pay Service tax for supply of manpower services. We note that for similar activities of the appellants in respect of two other clients namely IBM and CAP GEMINI, the appellants have paid Service tax under the category manp .....

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