Raju ORDER
Ramesh Nair, Member (J)
1. The brief facts of the case are that the appellants were engaged in supply of manpower to various industrial organizations as per the arrangements with the service recipients. The appellants would charge 10% of the actual wages to be paid to the workers so hired/supplied as their service charges. The appellants have recovered the wages/salary to be paid to the manpower supplied by them from the service recipient and paid to the man power. The appellants have treated the wages/salary as reimbursable expenses. The appellants have discharged the service tax on the aforesaid 10% service charges.
1.2. A show cause notice dated 19.05.2011 was issued to the appellants demanding the service tax for the period 2005-06 to 2009-10 on the ground that the appellants were required to pay service tax on the gross value including the wages/salary paid to the manpower so supplied. The show cause notice calculated the demand of service tax including the wages/salary paid to the man power so supplied. The show cause notice also alleged suppression, wilful misstatement on the part of the appellants and invoked the extended period of limitation. After considering the reply filed by the appellant, the Learned Commissioner of Service Tax, Ahmedabad confirmed the demand of service tax as proposed in the show cause notice. Therefore, the present appeal filed by the appellant on the grounds of merit as well as on limitation.
2. Shri Jigar Shah, Learned Counsel appearing on behalf of the appellant submits that the salary/wages is clearly a reimbursable expense which was paid by the appellants to the respective man power and the same was not retained, therefore, the said amount is not liable to service tax. He submits that the appellant's limited service provided to the service recipient is up to the procurement of labour, therefore, the provision of the service by the assessee to the companies ends on engagement of labour. The labourers work for the whole month and they earned salary for themselves and providing services to the company. The appellant has earned his part of income by way of commission it would be absurd to claim that the salary earned by the labourers from the company is part of consideration earned by the appellant. He submits that as per section 67 of the Finance Act, 1994, the service tax is payable only on the gross amount charged by the service provider for such service provided or to be provided by him. In the present case the salary/wages is not the service charges for the services provided by them, whereas the same is remuneration earned by the labourers by providing their service to the respective company. The service of appellant is limited to providing the man power to the company for which they are paid 10% commission which is the consideration against the service provided by the appellant, therefore, in terms of Section 67 also the entire amount i.e. Commission, Salary and Wages cannot be alleged as the gross value chargeable to service tax. He submits that the issue is settled in favour of the appellant in the following judgment:
Malabar Management Services reported in MANU/CC/8073/2007 : 2009 (9) STR 483 (Tri. Chennai).This decision has been held by the Hon'ble Supreme Court reported in 2019 (22) GSTL J56 (SC).
2.1. He submits that not only the issue settled in the above case but this Hon'ble Tribunal also followed ........