Motilal Nehru National Institute Of ... vs C.C.Ex. & S.Tax, Allahabad

Arising out of the order in appeal No.102/ST/Appl/Alld/2009 dated 29.8.2007 passed by the Commissioner (Appeals), Central Excise & Service Tax, Allahabad.

For approval and signature:

Honble Mr. Justice G. Raghuram, President

Honble Mr. H.K. Thakur, Technical Member

1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 26 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 26 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

Motilal Nehru National Institute of Technology . Appellants

Vs.

C.C.Ex. & S.Tax, Allahabad .. Respondent

Appearance:

None for the appellants [request for adjournment]

Present Shri B.B. Sharma, A.R. for the respondent/Revenue

Coram: Honble Mr. Justice G. Raghuram, President

Honble Mr. H.K. Thakur, Technical Member

Final Order No. 52165/2015

Per Justice G. Raghuram:

The appellant is an educational institution imparting courses of instruction in engineering and technology. A show cause notice dated 10.7.2007 was issued alleging that the appellant during 1.5.06 to 31.3.07 received Rs.9,24,375/- towards charges for facilitating placement of its students in different organisations, neither obtained registration, filed returns or remitted the service tax for having provided (Manpower Recruitment or Supply Agency) service, a taxable service. The notice proposed levy of service tax demand of Rs.1,13,144/-, apart from interest and penalties.

2. In response, the appellant asserted that manpower recruitment or supply agency service is defined as a commercial concern engaged in providing any service, directly or indirectly in any manner, for recruitment or supply of manpower, temporarily or otherwise to a client; that services provided by the appellant to its students clearly fall outside the purview of the definition of the service; that the appellants students cannot be categorised as its clients for rendition of this service; that appellant cannot also be considered to be commercial concern; and its activity is therefore outside the purview of the taxable service.

3. Rejecting the contentions of the appellant, the Deputy Commissioner , Central Excise, Allahabad vide the adjudication order dated 16.9.2008 held that service tax on manpower recruitment or supply agency covers the entire gamut of services provided by a manpower recruitment or supply agency to a client, from the initial stage of selecting and identifying manpower required for any prospective employment. The prospective candidate for employment is therefore a client for the purpose of service tax, concluded the primary authority. This Deputy Commissioner also referred to a Board Circular;No.96/7/2007-ST dated 23.8.2007 which clarified that educational institutions like IITs and IIMs fall within the definition of Manpower Recruitment or Supply Agency and services provided by such institutions in relation to campus recruitment, is taxable under this category. The Board Circular considered by the primary authority, namely clarified that when IITs or IIMs provide a placement platform for employers and collect charges from prospective employers, that activity amounts to manpower recruitment or supply agency service.

4. Aggrieved by the primary order, the appellant preferred an appeal which was rejected by the impugned order dated 29.12.2009 recording for equally creative reasons. The ld. Commissioner (Appeals), Allahabad, responding to appellants contention that only prospective employers could be termed as a client, in the context of manpower recruitment or supply agency service, observed in para 5.8 of the impugned order that the appellant himself had admitted to be charging students for campus placement ; that the contention of the appellant that only an employer or prospective employer could be termed as a client is incorrect and without any basis; that in the case on hand, the student is a client acting on a principal to principal basis when he agrees to pay the charges received by the appellant for the purpose of campus employment and knowingly pays the said amount from which the student derives the benefit of enhanced employment prospects.

5. The period in issue in the present appeal is 1.5.06 to 31.3.2007. During this period, manpower recruitment or supply agency service was defined in Section 65 (68) as any commercial concern/any person engaged in providing any service, directly or indirectly, in any manner for recruitment or supply or manpower, temporarily or otherwise, to a client. Section 65(105)(k) states that this service is a service provided or to be provided to any person , by a manpower recruitment or supply agency in relation to the recruitment or supply of manpower, temporarily or otherwise, in any manner.

6. From the definition and the enumeration of this activity as a taxable service, it is clear that what is taxable is the rendition of any service towards recruitment or supply or manpower, temporarily or otherwise to a client. The recipient of this service is a client who receives services in the nature of recruitment of supply of manpower, temporarily or otherwise. The recipient client must thus be an employer or prospective employer and the consideration for this service must flow from such employer to the provider of the service. The placement facilitation provided by educational institutions whereunder the placement charges are collected from students and not from an employer or a prospective employer, do not on a fair and reasonable interpretation of the taxable service as defined in the Act, fall outside the purview of either the definitional or enumerative provision of the Act.

7. The concurrent conclusions to the contrary recorded by the primary or lower appellate authorities are fundamentally misconceived, invite invalidation and are accordingly quashed. The appeal is allowed. No costs.

(Justice G. Raghuram)

President

(H.K. Thakur)

Technical Member

scd/

1