Supply Of Manpower To Five Hotels For Three Years Attracts Service Tax Under “Manpower Recruitment Or Supply Agency Service”: CESTAT

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has stated that supply of manpower to five hotels for a period of nearly three years would clearly attract service tax under the head of “manpower recruitment or supply agency service”. The Bench of Dilip Gupta (President) and P.V. Subba Rao (Technical) has observed that, “In relation to manpower supply to five units on cost recovery basis, the Commissioner noticed that ITC had deputed employees to other hotels to operate and maintain those hotels in line with ITC Welcome group standards and run those hotels in a smooth and efficient manner. Thus, supply of manpower to five hotels for a period of nearly three years would clearly attract service tax under the head of “manpower recruitment or supply agency service”.” In this case, the assessee/ITC had taken the hotels from the owners to operate, manage and administer them as independent business units. The agreements entered into between the Noticees and the owners of such hotels were for complete management and operations of the hotels. The dominant aspect was not the supply of manpower, it was the operations of the hotels as business units. The show cause notice proposed to recover service tax on “manpower recruitment or supply agency services” provided by ITC to the service recipient.” The Adjudicating Authority confirmed the demand. Aggrieved by the decision of Adjudicating Authority, the assessee filed an Appeal before Commissioner (Appeals), who upheld the order of the Additional Commissioner. The assessee has challenged the order passed by the Commissioner (Appeals) before the Tribunal. The assessee contended that the assessee is not engaged in the normal course of business to supply manpower. Also, ITC bona fide believed that it was not liable to pay service tax, so there can be no intention on the part of ITC to evade payment of service tax. Whereas it was contended by the department that ITC was recovering staff charges, namely, gross salary including provident fund, pension, gratuity of the employees which clearly shows that the staff belongs to ITC, and it was recovering such cost from the owners of the five hotels. Further it was contended by the department that it is the duty of an assessee to disclose all the material facts, and any deviation would amount to intention to evade payment of service tax. The Tribunal pointed out that even in a case of self-assessment, the department can always call upon an assessee and seek information and it is the duty of the proper officer to scrutinize the correctness of the duty assessed by the assessee. The departmental instructions issued to officers also emphasise that it is the duty of the officers to scrutinize the returns. The Tribunal found that the contention of the department cannot be accepted as there was no requirement for an assessee to seek clarification from the department. The Tribunal opined that “Service Tax Appeal filed by ITC to assail that part of the order passed by the Commissioner which denies relief to ITC relates to the demand of service tax proposed on “manpower recruitment or supply agency service”. In view of the above, the Tribunal dismissed the appeal. Counsel for Respondent/ Assessee: Tarun Gulati Counsel for Appellant/ Department: Jaya Kumari Case Title: Commissioner of Service Tax, Delhi Versus M/s. ITC Ltd, Gurgaon Case Number: Service Tax Appeal No. 1086 OF 2011 Click Here To Read/Download The Order

Supply Of Manpower To Five Hotels For Three Years Attracts Service Tax Under “Manpower Recruitment Or Supply Agency Service”: CESTAT

Mehak Dhiman

This is a premium content
Available exclusively to
Our subscribers

INR 1099+GST

Tags

Mehak Dhiman

Supply Of Manpower To Five Hotels For Three Years Attracts Service Tax Under “Manpower Recruitment Or Supply Agency Service”: CESTAT

Mehak Dhiman

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

Tags

Mehak Dhiman

This is a premium content
Available exclusively to
Our subscribers