By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
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Whether activity, of supplying qualified/skilled employees to subsidiary/group companies, is taxable under “manpower recruitment and supply agency service”? Held, No.
Facts:
The appellants manufacturers of fabrics and readymade garments supplied qualified/skilled employees to its subsidiary/group companies. Department alleged that the transaction was covered under manpower recruitment and supply agency services. Relying on the Divisional Bench decision in case of M/s. Paramount Communication Ltd. vs. CCE, Jaipur 2013-TIOL-37-CESTAT -DEL, the appellants contested that the services were not in the nature of manpower recruitment and supply agency services.
Held:
The appellants had deputed its employees to subsidiary/ group companies engaged in similar line of business. There was no allegation or findings about deputation of employees to any concern other than its own subsidiary/group companies. The employees did not work under the direction/ supervision and control of subsidiary/group companies but completed the work as directed by the appellants.
Manpower recruitment or supply agency phrase under service tax laws, stipulated “any commercial concern” within its purview and the appellants were merely a composite textile mill and not a commercial concern engaged primarily in recruitment or supply of manpower. The Hon’ble Tribunal relied on the decision in the case of Paramount Communication Ltd. (supra) wherein it was observed that in case the personnel works for two sister concerns, the rendition of services was by the personnel to both the companies and it was not a case of one company providing services to another. Accordingly, the appeal was allowed.
