2015 (4) TMI 79 - AT - Service Tax

Demand of service tax - manpower recruitment or supply agency service - contract with labour contractors for cutting and transporting sugarcane through labourers from producer/members supplying the sugarcane to the factory. - held that - Following decision of Amrit Sanjivini Sugarcane Transport Co. Pvt. Ltd. vs. CCE 2013 (8) TMI 58 - CESTAT MUMBAI - impugned orders are set aside - Decided in favour of assessee.

Summary

Issues:
Appeal against adjudication orders confirming service tax demands for providing 'manpower recruitment or supply agency service'; Interpretation of contracts with labour contractors and sugar factories; Applicability of previous Tribunal decision in a similar case; Refund claim restriction based on High Court order.

Analysis:
The appeals were reheard following a High Court order setting aside the Tribunal's final order and remanding the matter for fresh consideration without allowing refund of service tax already paid. The common issue pertained to service tax demands on the grounds of providing 'manpower recruitment or supply agency service'. The appellants, private limited companies, had contracts with labour contractors and sugar factories for sugarcane cutting and transportation. They argued that the issue was settled by a previous Tribunal decision. The Revenue contended that the demands were justified as the appellants were engaged in providing recruitment or supply agency services.

Upon reviewing the contracts, the Tribunal found that the services rendered did not fall under 'manpower recruitment or supply agency service'. Citing a previous Tribunal decision, it clarified that such service involves the supply of labor directly or indirectly, which was not the case here. The activity undertaken was deemed to be 'Business Auxiliary Service' involving the processing of goods belonging to the client, not 'Manpower Recruitment or Supply Agency Service'. Consequently, the impugned orders were set aside, and the appeals were allowed. However, the appellants were not entitled to any refund as per the High Court order restricting such claims.

This judgment highlights the importance of contract interpretation and the distinction between different taxable services under the law. It emphasizes the need for a thorough analysis of the nature of services provided to determine the correct tax liability. The reliance on precedent and legal definitions played a crucial role in resolving the dispute and providing clarity on the tax treatment of the services in question.