2016 (2) TMI 689 - AT - Service Tax

Manpower Recruitment or Supply Agency Services or Job work activity - services of cutting and transporting of sugarcane to the sugar factories - their job included planning, arranging, authorization and nomination of persons who would be engaged in the said work. - Held that - The issue involved in this case is no more res integra as the Hon ble High Court of Bombay in the case of GODAVARI KHORE CANE TRANSPORT CO. (P) LTD - 2015 (3) TMI 483 - BOMBAY HIGH COURT while upholding the judgement and order of this Tribunal holding that such an activity will not fall under the category of Manpower Recruitment or Supply Agency Services - No demand - Decided in favour of assessee.

Summary

Issues involved:
Service tax on appellants under 'Manpower Recruitment or Supply Agency Services' for the period 2005-06 to 2006-07.

Analysis:

Issue 1: Classification of services under 'Manpower Recruitment or Supply Agency Services'
The revenue authorities contended that the appellants' activity of providing manpower for cutting and transporting sugarcane falls under 'Manpower Recruitment or Supply Agency Services.' However, upon reviewing the agreements, it was found that the individuals authorized the appellants to enter contracts with sugar factories for engaging in the work. The appellants acted as representatives for a group of individuals, and the payment was a lump sum for the activity. The High Court of Bombay in a similar case held that such activities do not fall under 'Manpower Recruitment or Supply Agency Services.' The nature of the work and the interpretation of the agreement between the parties were crucial in determining the classification.

Issue 2: Historical context and taxation
The judgment highlighted the historical context of service tax regulations, noting that the services provided by the appellants were not taxable at the time of the alleged violation. The State's policy of gradually including different services in the service tax net was crucial in determining the applicability of taxation. The amendments in relevant provisions over time played a significant role in the taxation of services. The judgment emphasized that at the relevant time, the services rendered by the appellants were not found taxable, and the revenue's attempt to levy tax was deemed uncalled for.

Precedents and Conclusion
The Tribunal cited precedents where similar issues were addressed, emphasizing that the judgment of the High Court of Bombay was applicable in the present case. The Tribunal held that the impugned order was unsustainable based on the legal interpretation and historical context of service tax regulations. Consequently, the impugned order was set aside, and the appeals were allowed.

In conclusion, the judgment clarified the classification of services under 'Manpower Recruitment or Supply Agency Services' based on the interpretation of agreements and historical taxation context. The decision was guided by legal precedents and the applicability of the High Court's judgment in similar cases, leading to the setting aside of the impugned order and allowing the appeals.