A government department performing statutory functions that deploys staff to a related public utility entity on an assignment basis, where salaries are reimbursed without additional consideration, does not constitute a "Manpower Recruitment or Supply Agency Service" for service tax purposes.

P. ANJANI KUMAR:

Punjab Roadways, through the Director of State Transport, Punjab, challenged the impugned order dated 17.02.2017 vide which learned Commissioner has confirmed service tax of Rs.7,91,04,000/- along with interest and equal penalty under Section 78 of Finance Act, 1994 in addition to a penalty of Rs.10,000/- under Section 77 ibid.

2. Briefly stated the facts of the present case are that the appellants are engaged in providing Public Transport Service in the State of Punjab; they hire the buses and provide personnel to run the buses. On scrutiny of the records of the appellants, Revenue came to a conclusion that the appellants have provided Manpower Recruitment or Supply Agency Service as per Section 68 (105) (k) of the Finance Act, 1994 till 01.07.2012 and thereafter, a taxable service which is chargeable under as per Section 66B of the Finance Act, 1994; a show cause notice was issued and was confirmed vide the impugned order.

3. Shri Joy Kumar, learned counsel for the appellant submits that the issue is no longer res integra on merits and limitation having been decided by this Bench in the case of appellant’s themselves vide Final Order No.61023-61025/2025 dated 29.08.2025. He submits that the proceedings which culminated vide final order above, were for the period 01.04.2005 to 31.03.2010; it was held that extended period cannot be invoked against the appellants. When extended period was held not to be invokable for a previous period, the same cannot be invoked for a subsequent period. Moreover, in the instant case, Revenue has issued the impugned show cause notice, invoking extended period, whereas extended period has already been invoked in the earlier show cause notice issued on the same facts. He relies on Nizam Sugar Factory – 2006 (197) ELT 465 (SC). On merits also, the issue is squarely covered by the decision of this Bench cited above.

4. Shri S.K. Meena, learned Authorized Representative for the Department reiterates the findings of the impugned order.

5. Heard both sides and perused the records of the case. We find that this Bench finds as per the Final Order as above as follows:

11. Further, we find that the assessees in this case, have assigned their drivers/conductors/staff to work for PUNBUS and the PUNBUS reimbursed the operational charges to the state government.

12. Further, we find that PUNBUS was incorporated for safe, reliable, efficient, sustainable service of transport to the general public on the existing route permits of the Punjab Roadways. The Govt of Punjab decided that the staff of Punjab Roadways was to be deployed with PUNBUS on assignment basis without any additional remuneration or deputation allowance. Further, we find that the officers of Punjab Roadways, including the senior officer and other staff, were designated as officers/staff of the PUNBUS in addition to their duties in Punjab Roadways. When the officers/staff were deputed to PUNBUS, it was decided that salaries of the officers/staff are still being paid by the state government but are partly being reimbursed by the PUNBUS. Hence, assesses-Punjab Roadways, being a transport department of the State of Punjab, is performing statutory function to provide transport services to the general public and is not a manpower recruitment or supply agency.

13. Further, we find that the State Legal Advisor/the Secretary to Govt of Punjab, after considering the d