Manpower Supply

“Manpower recruitment or supply agency means any commercial concern engaged in providing any service directly or indirectly, in any manner for recruitment or supply of manpower, temporary or otherwise to a client”.

In the instant case, it was held that the Respondent deputed its employees to the group companies/ subsidiaries. Therefore, the Respondent cannot be said to be a commercial concern which is providing services to its client.

Further, the Respondent was not engaged in the business of providing recruitment or supply of manpower. The Respondent deputed its employees to the subsidiaries for limited period and they worked under the control and supervision of the Respondent only. .

Furthermore, the cost incurred by the Respondent in terms of salary, remuneration, perquisites, etc., was reimbursed by the group companies. Accordingly, there was no financial benefit to the Respondent.

Therefore, the HC held that the Respondent cannot be said to be a Manpower Recruitment or Supply agency rendering manpower supply services. The appeal filed by the Revenue was dismissed.


  1. There was change in the definition of Manpower Recruitment or Supply Agency at several occasions and considering recent change in the definition of Supply of manpower effective from July 1 2012, essence of the said judgment still holds good on principle and should not be chargeable to Service tax on deputation of employees to subsidiary companies for limited period on cost-sharing basis under Supply of Manpower services.
  2. It is advisable to have proper agreement to substantiate that deputed employees sent for limited period on actual cost sharing basis and do not work under the supervision and control of the service recipient so as to be out of the ambit of supply of manpower service.