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TMI Blog2023 (7) TMI 482X X X X Extracts X X X X X X X X Extracts X X X X ..... on their turnover and paid it to Chemplast. This system of supply of skilled manpower appeared to fall within the purview of taxable services under 'Manpower Recruitment and Supply Services' as defined in section 65(105)(k) of the Finance Act, 1994 (FA 1994), read with section 65(68) ibid and hence chargeable to service tax. From the records, it was seen that the taxpayer had received Rs.4,98,11,000/-, Rs.1,91,73,000/- and Rs.1,49,41,000/- from their group companies on account of corporate salary expenses for the years 2008 - 09, 2009 - 10 and 2010 - 11 respectively. By providing the services of their employees to the group companies, Chemplast appeared to have rendered 'manpower supply service' and appeared to be liable to pay service tax on the same. Therefore, a Show Cause Notice was issued to M/s. Chemplast Ltd. seeking to demand Service Tax of Rs.96,70,383/-. After due process of law, the matter was adjudicated. The original authority dropped all proceedings. Aggrieved by the said order, Revenue is before us in appeal. 3. No cross-objection has been filed by the respondent-assessee. 4. The learned Superintendent (AR) Smt. Anandalakshmi Ganeshram appeared for the appellant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Intercontinental Consultant and Technocrats Pt Ltd Vs. Union of India (2012-TIOL-966-HC-DEL-ST) has held Section 67 is supreme and refers to only the consideration for the services provided and anything other than consideration cannot be taxed. Revenue's appeal against the said judgment was dismissed by the Hon'ble Supreme Court in Union of India vs Intercontinental Consultant and Technocrats Pt Ltd (2018-TIOL-76-SC-ST). As regards limitation she said that the Show Cause Notice is time barred, as none of the ingredients that are required for invoking the extended period of 5 years are present. She relied on the following judgments in this regard: a) Commissioner of Central Excise, Nagpur Vs Ballarpur Industries Ltd. [(2007) 8 SCC 89] b) Continental Foundation Joint Venture Holdings Vs Commissioner of Central Excise [(2007) 10 SCC 337] She hence prayed that the impugned order be upheld. 5. Having heard the learned AR and Counsel for the contesting parties and having perused the Appeal Papers, we find that the following issue have been raised in the appeal; i) whether the respondents sharing of services of their corporate staff with the Sanmar group of companies can be tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ude any company or association or body of individuals whether incorporated or not". The impugned order also records that the respondent have in their additional submissions dated 16/05/2013, admitted that they and their group companies are distinct legal entities. This being so the respondent being a company, is covered by the term 'any person' and since they render service directly or indirectly, for supply of manpower, temporarily or otherwise to any other person, who happens to be a distinct company of their group, they are covered by the definition of "manpower recruitment agency". There is no confusion on this score. 6.1 A look at the section as it stood prior to the impugned period and after would be informative. The comparative table is shown below; Section 65(68) of FA 1994 Earlier section before changes As on 16/05/2008 "Manpower recruitment or supply agency" means any commercial concern engaged in providing any service, directly or indirectly, in any manner for recruitment or supply of manpower, temporarily or otherwise, to a client; "Manpower recruitment or supply agency" means any commercial concern person (1) engaged in providing any service, directly or indir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of law. Revenue refers to the payments made by the group companies to the respondent as 'consideration', while the respondent labels the same payment as a 'reimbursement'. Since the term 'consideration' has been defined in section 67, the discussion will have to be confined to understanding the term from the said description. No import of definition from any other statute or legal reference is possible. The factual position can be ascertained only by examining the nature of payment. The fact is that the group company's pay the respondent for the use of staff provided by them. This payment is for the benefit of using the expertise of the respondents staff for fixed periods. The term 'consideration' as defined in the section includes 'any amount' that is payable for the taxable services provided or to be provided which is broad enough to include payments labelled as 'reimbursement' under its fold. Once a nexus between the provision of service and payment is evident and it is determined that service has been provided in terms of the definition of the impugned service and payments made toward it are received from time to time, then the payments labelled as 'reimbursement' co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yments made towards the receipt of taxable service. It hence does not brook the question whether there is any markup or profit etc. or not. It has been discussed above that the services rendered by the respondent fits in to the definition of 'Manpower Recruitment and Supply Services'. Now it is found that the money received by the respondent is also covered by the term 'consideration' as per the explanation to section Section 67(1) of FA 1994. In Intercontinental Consultant and Technocrats Pt Ltd, referred to by the respondent, the petitioner received payments from their clients not only for their service as a consulting engineer, but were also reimbursed expenses incurred by them such as air travel, hotel stay, etc. It was paying service tax in respect of amounts received by it for services rendered to its clients. This is not the case here. Reimbursed expenses such as air travel, hotel stay, etc are only incidental to the main service for which Service Tax was being discharged and were beyond the value of the service rendered. It was in that context that the Hon'ble Court held, it is only the value of such service that is to say, the value of the service rendered by the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in F. No. 137/35/2011-ST dated 13.7.2011 to submit that the volume of activity undertaken or the presence or absence of the profit motive is irrelevant:- "2. .......... activity of ONGC of providing its staff on deputation to DGHC for a remuneration in the form of reimbursement from DGHC, is chargeable to service tax under 'Manpower Recruitment or Supply Agency's Service' in terms of Section 65(105)(k) of the Finance Act. As ............... to any other person. ........ 4. In the said definition the key words are, any person; directly or indirectly; in any manner; and temporarily or otherwise. It thus appears that organisations that make available their staff to other entities would be covered under the said definition. The motive for providing such manpower is of no consequence. The requirement for taxability is that the person should be engaged in an activity that is covered under Section 65(105)(k) ibid. The volume of activity undertaken or the presence or absence of the profit motive is irrelevant. (emphasis added) Boards circulars are not binding on the Tribunal however the doctrine of contemporanea expositio is from time to time being evoked by courts to cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods, is implicit in the staff 'sharing model' adopted by the group. Had the staff been remote controlled by the respondent during day-to-day operations they would be of no use to the group companies. The direction/ control of the respondent is hence of a general nature as they are the respondent's employees and are on their pay rolls, while the effective control of the staff during the course of their deployment is that of the group companies only. Our interpretation stands supported by para 2.9.1 of the 'Education Guide to Service Tax' brought out by the Tax Research Unit (TRU) of CBEC on 20/06/2012 which has also clarified the issue on similar lines, as under; 2.9.1 All are services provided by an employer to the employee outside the ambit of services? No. Only services that are provided by the employee to the employer in the course of employment are outside the ambit of services. Services provided outside the ambit of employment for a consideration would be a service. For example, if any employee provides his services on contract basis to an associate company of the employer, then this would be treated as provision of service. (emphasis added) We hence do not find merits i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing judgments to state that where various circulars / instructions are issued and where there was no clarity in the views expressed by the authorities, extended period cannot be invoked. [Commissioner of Central Excise, Nagpur Vs Ballarpur Industries Ltd. [(2007) 8 SCC 89] and that mere omission to give correct facts is not suppression. Suppression means failure to disclose full information with the intent to evade payment of duty. [Continental Foundation Joint Venture Holdings Vs Commissioner of Central Excise [(2007) 10 SCC 337]. 9.1 It is seen that this is an issue where the respondent has paid no tax at all. This is not a case where there was complication in understanding the scope of taxable services under 'Manpower Recruitment and Supply Services' as defined of section's 65(105)(k) and section 65(68) of FA, 1994, as has been discussed at para 6 above. Board does bring out Circulars and clarifications on various aspects of the law from time to time. But that does not mean that every issue is complicated and requires clarification. It puts forward its views so as to have uniformity in procedures between the department and the tax payer. Hence the present case cannot be said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missions before the lower authority. While ignorance of law cannot be pleaded as a defence, the respondent is a part of a group of companies and has specialised officers dealing with taxation and legal matters. The words 'any person' 'to any person' and 'any amount' are clear and without ambiguities and should not have caused misunderstanding to them, when they can be clearly understood by laymen. Company officials are expected to exercise reasonable care in the affairs of their company. Such a glaring omission on their part can happen by design and not by accident. Whether there was an intention to evade duty can only be known by the circumstances surrounding the act. An act of evasion is always hatched in secrecy and it is difficult at all times to adduce direct evidence of the same. The intention to evade can only be gathered from the inferences drawn from acts or illegal omission committed by a person's blameworthy act. Hence for the reasons discussed the inference of the department that the respondent M/s Chemplast had by their blameworthy conduct deliberately supressed facts with intention to evade payment of duty cannot be faulted. It has been held by courts that appellate b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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