Turbo Energy Ltd. Versus CGST & CE Chennai Outer (Vice-Versa)
Service Tax
2018 (9) TMI 1729 – CESTAT CHENNAI – TMI
CESTAT CHENNAI – AT
Dated:- 26-9-2018
ST/244/2012, ST/228/2012 – Final Order No. 42478-42479/2018
Service Tax
Ms. Sulekha Beevi, C.S., Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical)
For the Assessee : Ms. Nancy, Advocate
For the Revenue : Shri A. Cletus, ADC (AR)
ORDER
PER BENCH
The facts of the case are that M/s.Turbo Energy are engaged in manufacture of turbo chargers and parts thereof and are also registered as service tax assessee. During scrutiny of records, it appeared to the department that assessee had rendered Man Power Recruitment or Supply Agency Service (for short, MRSA) during 2005-06 and 2006-07, however had not discharged service tax liability thereon. It was noticed that assessee had deputed manpower to their clients during 2005-06 and 2006-07 and realized deputation charges from them. Department took the view
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ng the period of the dispute. The lower appellate authority found that there is no material evidence to prove that the asessee is an agency for supply of manpower and that there is no finding regarding the agreement between the assessee and the individual for used of the services of that individual to their clients for a consideration. For these reasons, the LAA found that the services provided to such group companies will not come under the category of MRSA services. The LAA held that though service tax is liable to be paid on the said service, the SCN is time-barred; that since accounts of assessee were subject to scrutiny on many occasions, the said demand is time-barred. Lower appellate authority however held that demand of service tax along with interest “could be settled under section 73 (3) of the Finance Act, 1994”. Both the assessee and the department are aggrieved with the above impugned order.
2. The assessee in their Appeal ST/244/2012 have submitted that the impugned orde
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Recruitment Agency and Supply Service.
iii) The monetary limit for filing of appeal by the department is Rs. 20 Lakhs.
In the present case, the demand of service tax Rs. 18,23,910/-, which is less than the above amount, hence department may be dismissed under litigation policy.
4. On the other hand, Ld. A.R Shri A. Cletus with regard to assessee's appeal submits that there is nothing wrong in the ruling of the Commissioner (Appeals) advising the assessee to pay up the amount under Section 73 (3) of the Act. With regard to department appeal, he reiterates the grounds of appeal.
5. Heard both sides and have gone through facts.
6.1 The scope of service tax liability in respect of the activity of staff to subsidiary / group companies is no longer res integra. The Hon'ble High Court in the case of CST Vs Arvind Mills Ltd. – 2014 (350) STR 496 (Guj.), has held that subsidiary companies cannot be said to be client of holding company and the deputation of employees was only for and in
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nies 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 direction of the company.
6. We have to examine the definition of Manpower Supply Recruitment Agency in background of such undisputable facts. The definition though provides that Manpower Recruitment Supply Agency means any commercial concern engaged in providing any services directly or indirectly in any manner for recruitment or supply of manpower temporarily or otherwise to a client, in the present case, the respondent cannot be said to be a commercial concern engaged in providing such specified services to a client. It is true that the definition is wide and would include any such activity where it is carried out either dire
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oard's instruction being F.No.390/Misc./1116/2017-JC dt. 11-07-2018. which prescribes monetary limit of Rs. 20 lakhs for filing of appeal before this forum. For all these reasons, the Appeal ST/228/2012, filed by the department is dismissed.
6.4 Coming to the assessee appeal ST/244/2012, Commissioner (Appeals) has held that service tax is liable to be paid in respect of employees deputed to Lapross Engineering Ltd., however, he has set aside the demand on time-bar.
We find it intriguing that having taken the decision to set aside the demand in respect of Lapross Engineering on time-bar, nonetheless, the lower appellate authority has opined that payment of service tax with interest could be settled under Section 73 (3) of the Act. In our opinion, the option to pay up the service tax under Section 73 (3) of the Finance Act, 1994 is made only at the initial stage when the escaped liability is brought to the notice of the assessee by the department or by the assessee on their own accord.
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