The Customs, Excises, Service Taxes Appellate Tribunal (CESTAT), Chennai Bench deleted the service tax demand on Manpower Recruitment or Supply Agency Service.
The appellant, M/s. Sak Soft Limited has been engaged in providing information technology related solutions including maintenance of software etc. They are paying service tax under Information Technology Software Services after such services have become taxable in 2008.
The department was of the view that for the period prior to 2008, as per the agreements entered by the appellant with various clients, the appellants have rendered MRSA services to these clients.
This allegation has been defended by the appellant stating that the services are nothing but Information Technology Software Services for which they have been paying service tax after 2008 and that these activities will not fall under the definition of MRSA.
Moreover, the services are predominantly provided by the appellant to companies who are not in the field of IT or software development. This will go to show that the appellant was providing Information Technology Software Services to these clients and not MRSA service.
It was submitted that the appellant’s core competence is of IT services, software consultancy. The tone and tenor of all the agreements executed by the appellant with its client is focused on providing specialized software services. In fact, the transactions under dispute clearly stipulate that the agreement with the appellant was for IT related services only.
The appellant urged from a fair perusal of the contract, it is beyond doubt that the characteristics of the transaction are software services and the personnel are only resources deputed for providing the said software services.
The coram of Sulekha Beevi and P.Anjani Kumar clarified that the definition of manpower recruitment supply agency service requires that the activity should be recruitment or supply of manpower, temporarily or otherwise. The essence would be that the service provider who renders MRSA service would have no control or supervision on the work / job done by such persons supplied / recruited.
On scrutiny of the show cause notice and the evidence the CESTAT said that there is no iota of evidence to show that the appellants were rendering MRSA service during the disputed period.
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