CESTAT Quashes Demand of Service Tax on Supply Agency Service on ground of Proper Discharge of Tax Liability by Service Provider and Recipient [Read Order]

The New Delhi bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) quashed the demand for service tax on supply agency service on the ground of proper discharge of tax liability by the service provider and service recipient. 

Aadarsh Sri Sai Manpower Solution (p) Ltd, the appellant assessee appealed against the order passed by the Commissioner for confirming the demand of service tax on the taxable amount received from the clients on account of manpower recruitment or supply agency service provided by them to their clients. 

R M Saxena, the counsel for the assessee contended that the concept of reverse charge mechanism under notification was to manpower supply would not apply to a private limited company. 

Further submitted that the deposition of 75% of the tax by service recipients and the remaining liability was deposited by the assessee and as such in all cases, 100% of the tax liability was paid to the government. 

Rajeev Kapoor, the counsel for the department relied on the decisions made by the lower authorities and contended that the demand of service tax made by the adjudicating authority was as per the law and liable to be sustained. 

The Bench observed that the government received the entire amount of tax an assessee cannot be called upon to make payment even if it had deposited some portion of the tax dues and the remaining portion was deposited by the service provider. 

Also stated that once the tax liability had been discharged, regardless of the person who had discharged, an assessee cannot be asked to pay the tax again. 

The two-member bench comprises Dilip Gupta (President) and Hemambika. Priya (Technical) quashed the order of demand of service tax while allowing the appeal filed by the assessee. 

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates