Service Tax Demand Under ‘Manpower supply Service’ by Invoking Extended Period: CESTAT Quashes Demand on ground of Limitation [Read Order]

The New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the service tax demand under the category of manpower supply service on the grounds of limitation.  Right Resource Management Service, the appellant assessee was registered with the Service Tax department for providing ‘Manpower supply Service’ and it has been paying service tax and filing Service tax returns.  The assessee appealed against the order passed by the Commissioner of Central Excise for confirming the service tax demand on the manpower supply service and for the imposition of penalty under sections 77 and 78 of the Finance Act,1994 against the assessee.

R M Saxena and Rajesh Kumar, the counsels for the assessee contended that there were no grounds to invoke an extended period of limitation of five years in the case and the Show Cause Notice (SCN) incorrectly alleged suppression of true taxable value and wilful mis-declaration of taxable value which had been upheld in the impugned order.

S K Meena, the counsel for the department contended that the assessee had failed to provide the required documents during the investigation despite repeated letters and summons, and therefore, the department had done the valuation based on the documents that were available and those which were received from the income tax department such as Form 26AS.  The Bench observed that if some tax escaped assessment even after the Returns being filed with the Range Superintendent and despite the assessee audited was that neither had done their job properly and the demand only in respect of the normal period of limitation can be sustained along with interest thereon but the demand for the extended period of limitation cannot be sustained.  The two-member bench comprising Dilip Gupta (President) and Subba Rao (Technical) quashed the service tax demand against the assessee on the grounds of limitation.  To Read the full text of the Order CLICK HERE

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