1.Whether assessee who received manpower recruitment or supply service from overseas companies are liable to pay service tax under reverse charge mechanism or not? 2.Whether assessee who received commission from overseas companies is liable to pay servic

PJ/Case Law/2013-14/1975

Case:- BMW INDIA PVT LTD Vs COMMISSIONER OF SERVICE TAX, DELHI

Citation:-2013-TIOL-1407-CESTAT-DEL

Brief Facts:- The Adjudication order assessed service tax liability of Rs. 6.5 crores under three heads:

a)    Rs.4.39 crores (approx.) under reverse charge mechanism for having received 'manpower recruitment or supply agency' service from BMW U.K. and Germany by way of deputation of technical and other personnel from the overseas companies for a tenured employment with the petitioner/appellant; the amounts remitted by the petitioner either to the deputed personnel directly or amounts representing salaries of such deputed personnel remitted to the overseas companies, as the case may be, having been assumed to be the consideration for the taxable service provided by the overseas companies.

b)    Rs.16,65,550/- and Rs.1,74,76,381 /- are assessed towards commission/amount received from overseas companies for having provided Business Auxiliary Services to the overseas entities; and

c)    Rs.28,24,406/- is alleged in the appeal before us as a result of erroneous accounting of the liability on education cess .

Reasoning of Judgment:- The Tribunal heard both parties and consider that in so far the Business Auxiliary Service is concerned [sub para (b) above] the petitioner claims immunity under the provisions of Export of Service Rules, 2005 relying on the judgment of the Larger Bench in Paul Merchants Ltd. vs. C.C.E., Chandigarh ( (2012-TIOL-1877-CESTA T-DEL). In view of the decision in Paul Merchants Ltd., prima facie the issue is in favour of the petitioner/ assessee.

The Tribunal also finds that the adjudication order also appears to be error in computation of education cess.

The Tribunal further finds that under the taxable service 'manpower recruitment or supply agency' the petitioner relies on interim order passed in appeals preferred by M/s Volkaswagen India (Pvt.) Ltd.; ITC Ltd. vs. C.S.T., New Delhi; UTI Asset Management Co. Ltd. vs. C.S.T., Mumbai I; and a final order in Paramount Communication Ltd. vs. C.C.E., Jaipur - (2013-TIOL-774-CESTA T-MUM); (2012-TIOL-855-CESTA T-DEL); (2012-TIOL-1822-CESTA T-MUM) and (2013- TIOL-37-CESTA T-DEL) respectively. In view of consistent orders passed granting waiver of pre-deposit in aforesaid orders and the final order in Paramount Communication Ltd., we see a strong prima facie case in favour of the petitioner in respect of the adjudicated tax liability under 'manpower recruitment or supply agency' service as well.

The Tribunal decides on the aforesaid analysis and grant waiver of pre-deposit in full and stay all further proceedings pursuant to the impugned adjudication order, pending disposal of the appeal. In view of the above order passed in the stay application, the miscellaneous application has become infractuous and is accordingly dismissed.

Decision:- Pre-deposit waived and stay granted.

Comments:- it is clear from this case is that if a assessee received commission from overseas companies for providing Business Auxiliary Services to the overseas entities. Assessee can claims immunity under the provisions of Export of Service Rules, 2005 relying on the judgment of the Larger Bench in Paul Merchants Ltd. vs. C.C.E., Chandigarh ( (2012-TIOL-1877-CESTA T-DEL).

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PJ/Case Law/2013-14/1975

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