At, Customs Excise Service Tax Appellate Tribunal Principal Bench New Delhi
By, THE HONORABLE JUSTICE: V. PADMANABHAN
By, MEMBER AND THE HONORABLE JUSTICE: RACHNA GUPTA
For Petitioner: Ajay Aggarwal, Advocate And For Respondents: Sanjay Jain, D.R.
1. The appeal is against the Order in Original No. 19/2014-15 dated 25.03.2015. The Appellant is engaged in the manufacture of PP Compounds, falling under Chapter 39 of the Central Excise Tariff Act, 1985. The period under dispute is 01.07.2012 to 31.03.2014.
2. The principal of the Appellant company in Japan, i.e., M/s. Mitsui Chemical Industries (MCI) Japan deputed their employees for working in the factory premises of the Appellant. Such deputation was done under specific terms and conditions regarding the remuneration of such persons deputed from Japan. After scrutinizing the agreement between the Appellant and MCI, the Department was of the view that such employees were being paid by the foreign principal and not the Appellant, and hence, MCI has supplied manpower from abroad to the Appellant. Show Cause Notice dated 30.09.2014 was issued proposing to demand Service Tax under Reverse Charge basis under the taxable service of Manpower Recruitment and Supply Agency Services, defined under Section 65(68) of the Finance Act, 1994. After the due process of adjudication, vide the impugned order, demand for Service Tax was confirmed. Aggrieved by this order, the present appeal has been filed.
3. In this connection, we heard Shri Ajay Aggrawal, learned Advocate for the Appellant and Shri Sanjay Jain, learned D.R. for the Respondent.
4. The learned Advocate submitted that the identical issue of the same Appellant for the earlier period came up before the Tribunal and the case was decided by Final Order No. 51272/2018 dated 21.03.2018. He submitted that the issue stands decided in favour of the Appellant.
5. Learned D.R. reiterated the impugned order.
6. After hearing both sides and perusal of records, we find that the Tribunal has decided the identical issue for the earlier period vide Final Order No. 51272/2018 dated 21.03.2018. The Tribunal decided the issue as follows:
"6. During the disputed period, certain employees of the parent company, MCI Japan were deputed to work in the appellant's factory. We have perused the agreements between the MCI and the appellant, governing the terms of such deputations. We have also perused the Employee Contracts, wherein we note that during the period of deputation, when such persons were working in the appellant's factory, there was employer - employee relationship between the appellant as well as the deputies. The salary was paid by the appellant to such deputies. Even the Provident Fund contribution and other social security benefits were discharged by the appellant which clearly supports the arguments that the relationship was strictly in the nature of employer - employee.
7. The department has demanded Service Tax on reverse charge basis under Section 66A, considering that the employees of the principal were placed at the disposal of the appellant, and the activity is covered under the category of Manpower Recruitment and Supply Agency We find that this issue has been considered by the Tribunal in several cases and stands decided in favour of the appellant. In the case of Airbus Group India Pvt. Ltd. (Supra), the Tribunal observed as follows:
"6. The second point of dispute regarding service tax liability of the appellant, again on reverse charge basis, under the category of 'manpower recruitment and supply agency service', we find that the other parties of the agreement located abroad are not falling under the category of 'Manpower Recruitment and Supply Agency'. The impugned order nowhere established that the foreign entities are involved in such business of manpower supply. The appellant have a strong case of this ground alone. Further, on perusal of the agreement, we find that the employees are under the control and supervision of the appellants and their salary is disbursed by the appellant. All the statutory obligations as an employer of PF, TDS for income tax are all fulfilled by the appellant. It is not shown in the proceedings before the lower Authority that any consideration is being paid for obtaining manpower supply service from the foreign companies. The reimbursement amount paid by the appellant to the foreign companies is relating to the cost of salaries and wages of the employees working under the appellant. In CCE v. Computer Sciences Corporation India Pvt. Ltd. (supra) the Tribunal held that for tax purposes the service provided must be by a 'manpower recruitment agency' and such a service has to be in relation to supply of manpower. In CCE v. Arvind Mills Ltd. (supra), the Hon'ble Gujrat High Court held that deputation of employees from one company to another does not involve profit or finance benefit there is no relationship of agency and client involved in such deputation. In Volkswagen India Pvt. Ltd. v. CCE (supra) the Tribunal held when the global employ
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ees working under the Indian company are working as their employees and having employee-employer relationship there is no supply of manpower service and no tax liability arises." 8. By following the decision of the Tribunal (Supra), we find no merit in the impugned order, and hence, we set aside the impugned order and allow the appeal." 7. By following the decision of the Tribunal for the earlier period, we find no merit in the impugned order, and hence we set aside the order and allow the appeal with consequential relief.