Demand of Service Tax on Manpower Recruitment and Supply Agency Service and Security Service: CESTAT Remand matter for Verifying Documents [Read Order]

The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) remanded the matter for verifying documents related to the demand of service tax on Manpower Recruitment and Supply Agency Service and Security Service. M/s. The Indian Medical Practitioners’ Co-Operative Pharmacy and Stores Ltd, the appellant is a Multi-State Co-Operative Society engaged in manufacturing of Ayurveda, Unani and Siddha Medicines has filed the appeal challenging the Order passed by the Commissioner of GST and Central Excise (Appeals), wherein demands of Service Tax under Reverse Charge Mechanism along with interest and imposition of equal penalty on manpower recruitment and supply agency service was confirmed and regarding demand of Service Tax on GTA services was remanded to the original adjudicating authority and also setting aside the demand of Service Tax on Notice-Pay. Non-payment of Service Tax on Manpower Supply and Agency Service (MRA) under RCM, Non-payment of Service Tax on Security Services under RCM, Non-payment of Service Tax on Goods Transport Agency Service (GTA) under RCM, and Non-payment of Service Tax on Notice-Pay collected from employee were alleged against the assessee. A Show Cause Notice was issued to demand a Service Tax of Rs.29,92,325/- (Rupees Twenty Nine Lakhs Ninety Two Thousand Three Hundred and Twenty-Five only) on Manpower Supply and Agency Service under RCM for the period from October 2012 to June 2017 under the proviso to Section 73(1) of Finance Act, 1994. After due process of adjudication, the original adjudicating authority has confirmed the Service Tax demands raised on Manpower Recruitment and Supply Agency Services and GTA Services under the Reverse Charge Mechanism. An amount of Rs.2,485/- was also confirmed as Service Tax on ‘Notice-Pay’ along with interest and penalties were imposed under Section 78(1) of the Finance Act, 1994 on the above confirmed Service Tax. The Commissioner of GST and Central Excise (Appeals), Anna Salai, Chennai, has confirmed the Service Tax demand in respect of Manpower Recruitment and Supply Agency Services along with interest but remanded the issue of demand of Service Tax on GTA Services and demand of Service Tax on Notice-Pay was set-aside. The appellate authority has also justified invoking the extended period. The appellant had received Manpower Recruitment and Supply Agency Services and also Security Services from the service providers viz., Spark the Solutions, Care Detective Security Service, Vigilant Security Service and Rhino Security & Allied Services, who are all proprietorship/partnership firms. The appellant had stated that they had entered into agreements with these service providers and as per the agreements service charges along with the applicable Service Tax was paid to the service providers who are registered with the Department and must have paid the Service Tax collected to the Government. The original adjudicating authority has observed that the appellant had failed to submit. The Tribunal has submitted that they have availed the services in respect of Manpower Recruitment and Supply Agency Services and these service providers are registered with the Service Tax Department and have raised bills on IMPCOPS charging Service Tax which has been paid as evidenced by a few copies of sample invoices. The department argued that with respect to Manpower Recruitment and Supply Agency Services and Security Services, the service receiver is required to pay 75% or 100% of the Service Tax under the Reverse Charge Mechanism which the appellant has failed to do. As there is a clear contravention of the law, the demands raised are justified. The lower appellate authority has confirmed the demand for Service Tax in respect of Manpower Recruitment and Supply Agency Service and Security Service, but, the demand for Service Tax on Goods and Transport Agency Service was remanded to the original adjudicating authority as the appellant was found to have submitted details relating to freight charges paid which were below Rs.750/- and so exempted from payment of Service Tax. Since the appellant is required to produce necessary evidence to the Departmental authorities regarding payment of Service Tax collected from the appellant by the service providers to the Government account, the single-member bench of Mr Vasa Seshagiri Rao, Member (Technical) remanded the issue of demand of Service Tax on Manpower Recruitment and Supply Agency Service and Security Service to the original adjudicating authority for carrying out verification of copies of ST-3 returns filed by the service providers/documents or any certificate or declaration to pass a speaking order in strict observance of principles of natural justice. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

Demand of Service Tax on Manpower Recruitment and Supply Agency Service and Security Service: CESTAT Remand matter for Verifying Documents [Read Order]

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