2013 (10) TMI 630 - AT - Service Tax

Demand - Manpower Recruitment or Supply Agency Service - Held that - The appellants have undertaken chipping and painting work to Indian Navy Vessels and after going through the notification and the documents we find that this work was undertaken for navy and is exempted as claimed. Similarly we also find that the appellants have made out a prima facie case in respect of road and drainage system. As regards the miscellaneous work, the learned consultant would not provide any details. He submits that the portion on which VAT was paid should be deducted - approximately the appellant on a prima facie basis will be liable to pay about ₹ 7 lakhs and since they have already paid an amount of ₹ 1,34,226/- in our opinion appellant should be required to deposit another ₹ 5 lakhs for hearing the appeal - stay granted partly.

Summary

Issues:
1. Whether the appellant is liable to pay service tax under 'Manpower Supply Service' for managing a pool of workers.
2. Exemption applicability on specific works undertaken by the appellant such as chipping and painting work for Indian Navy Vessels, repair of road, and miscellaneous work.
3. Calculation of tax liability and pre-deposit requirement for the appeal.

Analysis:
1. The appellant argued that they are not liable to pay tax under 'Manpower Supply Service' as they only manage a pool of workers formed by a settlement between Stevedores Association and a labor union. The appellant receives 15% as trade commission for managing the pool. However, the tribunal disagreed, stating that the activity undertaken by the appellant indeed amounts to 'Manpower Supply Service.' The tribunal highlighted that the appellant disburses salaries to the workers in the pool, making them the presumed employer. The tribunal found no prima facie case to support the appellant's claim that the salaries paid to laborers should not be included for service tax levy.

2. Regarding specific works undertaken by the appellant, the tribunal examined each in detail. The chipping and painting work for Indian Navy Vessels was found to be exempted as claimed by the appellant. Similarly, the repair of the road and drainage system was also considered exempted based on relevant notifications. However, details on the miscellaneous work were not provided by the appellant, leading to uncertainty in tax liability calculation.

3. After considering all submissions and exemption notifications, the tribunal estimated that the appellant would be liable to pay approximately Rs. 7 lakhs on a prima facie basis. Since the appellant had already paid Rs. 1,34,226, the tribunal directed them to deposit an additional Rs. 5 lakhs within 8 weeks for the appeal to be heard. Compliance was required by a specified date, with a waiver of pre-deposit for the remaining dues and a stay against recovery during the appeal's pendency.

This judgment clarifies the appellant's tax liability under 'Manpower Supply Service,' exemption applicability on specific works, and the requirement for pre-deposit to proceed with the appeal. The tribunal's detailed analysis of each issue provides a comprehensive understanding of the case and the legal principles applied.