2015 (10) TMI 2220 - AT - Service Tax

Liability of Service Tax - Manpower Recruitment and Supply Agency Service - Welding Job and Cleaning Services - Appellant is not contesting the liability of tax on cleaning activity service - Held That - A perusal of the work order does not indicate that the appellant is required to supply only the manpower. On the contrary, scope of the work order indicates a specific job of welding and gas cutting to be undertaken by the appellant. Findings recorded by first appellate authority do not rely on any contrary evidence to show that the appellant had charged NTPC on mentioning hour basis - In absence of any such evidence, view undertaken by both the lower authorities needs to be set aside Decided in favour of assessee.

Summary

Issues:
1. Liability of service tax on services rendered under "Manpower Recruitment and Supply Agency Service" and "Cleaning Activity Service."

Analysis:
The judgment pertains to an appeal against an Order-in-Appeal passed by the Commissioner of Central Excise & Customs, Nasik, regarding the liability of service tax on services provided by the appellant. The lower authorities had held that the appellant's contracts for welding job and cleaning services were taxable, resulting in confirmed demands with interest and penalties. The appellant accepted the liability for cleaning activity services but contested the penalties imposed. On the other hand, the Department Representative argued that the appellant's work order from NTPC indicated a specific job of welding and gas cutting, not just supplying manpower. The first appellate authority relied on a Board's Circular to support this view.

The Tribunal carefully considered the submissions and found that the appellant did not contest the service tax liability on cleaning activity services. Therefore, the liability along with interest was upheld, and the appeal on this issue was rejected. However, concerning the "Manpower Recruitment and Supply Agency Service," the Tribunal examined the work order from NTPC, which clearly outlined a firm rate basis for welding and gas cutting tasks. The work order did not solely require the supply of manpower, indicating a specific job to be undertaken by the appellant. The Tribunal disagreed with the lower authorities' classification of the service under "Manpower Recruitment and Supply Agency Service" and set aside their decision based on the work order's terms.

The Tribunal referenced a judgment of the Hon'ble High Court of Bombay in a similar case to support its interpretation. The Tribunal highlighted that the nature of the work undertaken by the appellant was crucial in determining the tax liability. The Tribunal emphasized that the Revenue's attempt to levy tax on the services provided by the appellant was not supported by the historical context of service tax regulations. The Tribunal concluded that the impugned order was unsustainable in light of the facts and judicial pronouncements on the issue. Consequently, the penalties imposed on the appellant for cleaning activity services were set aside, considering a possible genuine misunderstanding on the appellant's part. Finally, the appeal was disposed of based on the above findings and analysis.