2015 (8) TMI 957 - AT - Service Tax

Manpower recruitment and supply services - services rendered by the appellant of making arrangements for activities of harvesting of sugarcane, loading and unloading and transportation of sugarcane in and for various sugar factories - Revenue alleges that appellant receives the payment from sugar factories and retains a part of the amount while paying the sub-contractors and also charges the sugar factory an amount of Management fee - Held that - involved in this case is now squarely covered by the decision of this bench in the case of Godavari Khore Cane Transport company Private Ltd. - 2015 (4) TMI 79 - CESTAT MUMBAI where an identical issue was agitated before the bench. Aggrieved, that in that case decision went in favour of the assessee, revenue preferred an appeal to the Honourable High Court of Bombay and their Lordships by judgement d 2015 (3) TMI 483 - BOMBAY HIGH COURT dismissed the appeal of the revenue - impugned order is unsustainable and liable to be set aside - Decided in favour of assessee.

Summary

Issues:
Taxability of services rendered by the appellant regarding activities of harvesting, loading, unloading, and transportation of sugarcane for various sugar factories.

Analysis:
The appeal was filed by the appellant assessee against the order in original No. 3/ST/2010 dated 24.02.2010, concerning the taxability of services provided. The appellant contested the demands raised under the category of manpower recruitment and supply services for the period 2005-06 to 2007-08. The issue revolved around the appellant's retention of a part of the payment from sugar factories and charging a management fee. The appellant argued that the laborers supplied were for harvesting and transportation of sugarcane for agricultural produce. The learned departmental representative supported the findings of the lower authorities.

The issue was found to be similar to a case decided by the bench in the matter of Godavari Khore Cane Transport company Private Ltd. where the decision favored the assessee. The revenue had appealed to the High Court of Bombay, which dismissed the appeal on January 27, 2015. The High Court's judgment highlighted the nature of the contract between the respondent and the sugar factory, emphasizing that the services provided did not fall within the definition of "Manpower Recruitment or Supply Agency Services." The Tribunal concluded that the work undertaken by the respondent, though involving manpower for harvesting, loading, and unloading, was not considered as supply of manpower under the relevant provisions.

The Tribunal rejected the appellant's argument that the services provided constituted supply of manpower, emphasizing that the nature of the work was a package deal to supply essential raw material to the sugar factory. The Tribunal's decision was based on the interpretation of the agreement between the parties and the historical context of service tax legislation in the country. The Tribunal noted that at the time the notice was issued, the services provided were not taxable under the law, and the Revenue was unable to levy tax on the respondent's services. The appeal was dismissed, setting aside the impugned order and allowing the appeal in favor of the appellant assessee.