Customs, Excise and Gold Tribunal - Mumbai
Institute Of Banking Personnel ... vs Cst on 8 September, 2005
ORDER
Jyoti Balasundaram, Vice President
1. The application for waiver of Service Tax of Rs. 1,00,60,498/- confirmed against the applicants herein for the period from 01st October 98 to 31st March 2003 and penalty under section 75A, 76 & 77 and penalty equal to the Service Tax amount under Section 78 of the Finance Act, 1994, arises out of the order of the Commissioner(Appeals0, who has upheld the adjudication order by which the above amounts were confirmed against the appellants. The Service Tax demand has been confirmed, as a result of holding that the applicants are a Manpower Recruitment Agency and hence, liable to pay Service Tax under the provisions of Section 65(105)(k) of the Finance Act, 1994. The submission of the applicants that they are not Manpower Recruitment Agency for the reason that they do not provide service for recruitment of manpower but only prepare test papers for the institution, such as banks, etc. sometimes, they correct test papers, have been rejected by the authorities below, who have also rejected their submissions that they are not a commercial concern, and, therefore, do not fall within the definition of "Manpower Recruitment Agency" as per Section 65(68) of the Finance Act, 1994.
2. We have heard both sides. Several arguments are advanced by both sides on what constitutes a manpower recruitment agency. While the applicants contended that the services rendered by them is only by way of preparation of test and question papers and sometimes correction of the same, Ld. SDR would take us through the show cause notice, etc. providing for various services to be rendered by the applicants and he would therefore contend that the applicants are covered by the definition of 'Manpower Recruitment Agency', which is wide enough to take in provision of any service directly or indirectly or in any manner for recruitment. Arguments are also advanced on the aspect as to whether the applicant is a commercial concern or not. The applicants submit that they are not set up solely or mainly for the purpose of making profit and rely upon the orders of the Income Tax Appellate Tribunal dated 24/12/97 in their own case by which the Tribunal held that they were entitled to exemption in terms of Section 11 of the Income Tax Act, 1961 providing that income derived from property held under trust for wholly charitable purpose, to the extent to which such income is applied to such purpose in India, will not be included in the total income of the previous year of the person in receipt of the income. On the other hand, Ld. SDR would submit that all the documents on record make it very clear and it is also the finding of the Commissioner(Appeals) that the applicants strives to make profit and the surplus and deficit account on various years would show that they are making heavy profit and therefore cannot be treated as anything but commercial concern. Ld. SDR also highlights the fact that the contract between the banks and the applicants herein, which would reveal the true and exact nature of the applicants being commercial concern is not on record and has not been considered by the ITAT while passing its order dated 24/12/97.
3. We are of the view that the question as to whether the applicants fall within the coverage of Section 65(68) of the Finance Act, 1994 as manpower recruitment agency is debatable, having regard to the wide scope of the definition under the above mentioned sub section of section 65. However, we note that the applicants have made out a strong prima facie case on the ground that they are not prima facie a commercial concern in the light of Income Tax Appellate Tribunal's order cited supra, wherein the bench had before it the details of surplus and deficit income and expenditure of the applicants for the years 1990-1994 when coming to its conclusion that the applicants were entitled to exemption under section 11. The extension of the exemption under section 11 of the Income Tax is because prima facie the Bench of the Income Tax Appellate Tribunal accepted the contention of the applicants that they were charitable trust. In this view of the matter, we waive the requirement of pre-deposit of Service Tax and penalty involved in the present case and stay recovery thereof pending the appeal.