By TIOL News Service

MUMBAI, APRIL 13, 2017: THIS is a Revenue appeal.

The facts of the case are that the respondent is a defunct sugar factory which has been taken over by the Maharashtra State Co-operative Bank for non-discharge of dues.

The said Bank, in a tripartite agreement, leased out the sugar factory to various other sugar manufacturers on an agreement which indicated for payment of salaries and wages and the statutory dues of the employees of Tasgaon Palus Taluka SSK Ltd.(respondent) . In pursuance of such an agreement, the sugar factories who leased the factory,paid the salaries and wages to the employees of the respondent.

It is the revenue contention that such an amount paid to the individual employees directly is liable to be taxed under 'Manpower recruitment or supply agency's services'.

The adjudicating authority recorded a categorical finding that the salaries and wages of individual employees of the respondent were paid by the lessee directly and not a single rupee is paid to the respondent herein; since there is no payment received, hence the assessable value is '0' and when assessable value is '0' there cannot be any tax and no liability arises.

The Bench agreed with this conclusion that - when there is no amount which is required to be taxed, the service tax liability has to be '0' only.

The Revenue appeal was rejected.

In passing: Also see 2017-TIOL-482-CESTAT-MUM , 2014-TIOL-2478-CESTAT-MUM .

(See 2017-TIOL-1231-CESTAT-MUM)