The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), upheld service tax demand on manpower recruitment or supply agency service’ taking into consideration that the rate fixed is a measure of value of services.
It was noticed that the appellant, M/s.Talking Technologies (P) Ltd, received consideration towards supply of employees as per the requirement of their client viz., M/s.WTI Advance Technologies Ltd. (WTI, for short). The said activity is taxable under the category of “Manpower Recruitment and Supply Agency Service” (MRSS). The appellant had not discharged service tax under this category also.
The taxable service of “Manpower Recruitment or Supply Agency Service” has been defined under the Act as a service, provided or to be provided to a client, by manpower recruitment or supply agency in relation to the recruitment or supply of manpower temporarily or otherwise in any manner. Thus, a service becomes taxable under Manpower Recruitment or Supply Agency Service when the service is in relation to supply of manpower to a client though temporarily.
The appellant deputes its employees to provide services to M/s. WTI and their clients. Appellant received payment for deputing such employees. The appellant has contended that the rate is fixed as a measure of value of the services which is usually adopted in the consultancy industry which itself is a clear indication that the service rendered is Manpower Recruitment or Supply Agency Service.
It was submitted by the Authorized Representative that the appeal filed by the party before the Apex Court against such decision has been dismissed as withdrawn.
A Two-Member Bench of the Tribunal comprising CS Sulekha Beevi and M Ajit Kumar, Technical Member upheld the service tax demand on the manpower recruitment or supply agency service.
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