2013 (8) TMI 494 - AT - Service Tax

Manpower Supply Services u/s 65 (105) (k) - Duty Demand Interest and Penalty - Assesse was performing certain tasks in the factory mainly for processing of coffee beans to make instant coffee and thereafter packing the same - Revenue was of the view that the assesse was providing Manpower Supply Services Held that - The character of the activity was actually manufacturing activity or supply of manpower, the difference can be a very thin depending on what exactly was the responsibility of the assesse - notice does not expressly invoke provisions of 73A and in a passing manner for the purpose of invoking the extended period - it was stated that tax was collected but not paid - The contract clauses as also the manner in which it was operationalized were to be examined in detailed for deciding the issue - A worksheet showing the number of manpower employed by itself may not be sufficient to determine the nature of the responsibilities of either parties and nature of service 5lakhs were ordered to be paid as pre-deposit upon such waiver rest of the duty to be waived till the final disposal Decided partly in favor of assesse.

Summary

Issues:
1. Modification of a stay order passed ex-parte without examining the merit.
2. Classification of services provided as either manufacturing activity or supply of manpower.
3. Liability for payment of service tax and pre-deposit of dues.

Analysis:

Issue 1: Modification of Stay Order
The applicant filed a miscellaneous application seeking modification of a stay order passed ex-parte without examining the merit. The counsel's absence due to vehicle breakdown led to the ex-parte order directing pre-deposit of the entire service tax amount. The Tribunal, in the interest of justice, recalled the ex-parte order and decided to hear the matter on merits with both parties present.

Issue 2: Classification of Services
The main issue in the appeal was the classification of services provided by the applicant to M/s. TATA Coffee Ltd. Revenue contended that the services were Manpower Supply Services, leading to a show-cause notice for non-payment of service tax. The applicant argued that their services included manufacturing activities, packaging, cargo handling, and maintenance, distinct from manpower supply. The Tribunal noted the need for detailed examination of the contract clauses and operational aspects to determine the nature of services provided.

Issue 3: Liability and Pre-deposit of Dues
The Revenue alleged that the applicant collected service tax but did not remit it to the exchequer. However, the Tribunal found insufficient evidence to support this claim. Regarding the pre-deposit of dues, the Tribunal ordered the applicant to deposit a specified amount within six weeks for admission of the appeal, with the balance dues waived for appeal admission and collection stayed during the appeal's pendency.

In conclusion, the Tribunal addressed the issues of modifying the stay order, classifying the services provided, and determining liability for service tax payment. The decision highlighted the need for detailed examination of contractual terms and operational aspects to ascertain the nature of services. The Tribunal also clarified the pre-deposit requirements for appeal admission, ensuring a fair hearing for both parties.