Whether sharing of office personnel with sister concern covered under “supply of manpower”?

PJ/Case Laws/2012-13/1440

Case:- M/S PARAMOUNT COMMUNICATION LTD V/S COMMISSIONER OF CENTRAL EXCISE, JAIPUR

Citation:- 2013-TIOL-37-CESTAT-DEL

Brief Facts: - The appellant, M/s. Paramount Communications Wire and Cable Ltd., and another sister concern company M/s. Paramount Wire and Cable Ltd. were utilising the services of certain common staff located in their common head office at Delhi. Such staff was on the pay roll of Paramount Communication Ltd. They were doing the work relating to both the companies and Paramount Cables Ltd. was paying their share of the cost of these employees to the appellant. There are entries in the books of accounts of the appellant showing receipt of payments from Paramount Wires and Cables. Revenue wants to tax this receipt as consideration for supply of manpower.

Reasoning of Judgment: - The Hon’ble Tribunal held that the present appellant is a manufacturer of excisable goods and is not engaged in the business of supply of manpower, though they were sharing the services of some of the office personnel with their sister concern. Here there is no case of supply of manpower by the appellant to the sister company because the employees concerned continued to work for the appellant also and arrangement in which certain employees work for two of sister concerns and the expenses of employees are shared, the manpower is not supplied by one company to other. The situation is that the personnel do the work of both the companies. The service is by the personnel to the two companies in question and not one company providing service to the other company. So there is no taxable activity on the part of the appellant to the other to be taxed under manpower supply service taxable as 65(105)(k) and therefore, the stay petition as well as appeals are allowed. The fact that payment to employee is made by one company and there is inter-company payment of the share of the cost of the employees utilised by the other company cannot be interpreted to mean one company was providing service to the other.

Decision: - The appeal was allowed.

Comment:-The analogy drawn from this case is that supply of personnel in every situation cannot be held to be covered under the service of ‘supply of manpower’. When some of the employees of one company also work for the sister concern of the same company, it cannot be said that there is supply of manpower by the one company to its sister concern even when the cost of such employees is being shared by both the companies.

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PJ/Case Laws/2012-13/1440

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