In a major relief to M/s Aircel Ltd, the Chennai CESTAT held that deputation of employees to a subsidiary company would not constitute ‘Manpower Recruitment & Supply Agency Service’ since it cannot be said to be a commercial concern engaged in providing such specified services to a client.
A division bench of the tribunal was hearing an appeal filed by the Company against the order of the Commissioner of Central Excise, Coimbatore.
The appellant, M/s aircel Ltd, had appointed certain employees in their subsidiary company namely Aircel Cellular Ltd. (ACL). It was clearly mentioned in the appointment letter that the appellant had made it clear that they are required to work in the subsidiary companies also depending upon the job exigencies.
However, the department demanded Service Tax from the appellant claiming that the said service would fall under the head “Manpower Recruitment & Supply Agency Service”.
Quashing the order, the Tribunal noted that though the definition of Manpower Recruitment Supply Agency means any commercial concern engaged in providing any services directly or indirectly in any manner for recruitment or supply of manpower temporarily or otherwise to a client, in the present case, the respondent cannot be said to be a commercial concern engaged in providing such specified services to a client.
“It is true that the definition is wide and would include any such activity where it is carried out either directly or indirectly supplying recruitment or manpower temporarily or otherwise. However, fundamentally recruitment of the agency being a commercial concern engaged in providing any such service to client would have to be satisfied. In the present case, facts are to the contrary.”
Following the decision in Aravind Mills Ltd, the Tribunal quashed the order.
Read the full text of the Order below.
