2016 (10) TMI 1234 - AT - Service Tax

Classification of services - conversion of aluminium ingots to various aluminium articles in the factory premises of M/s. Jayashree Die Casting Pvt. Ltd. with his own manpower - whether classified as supply of manpower or otherwise? - Held that - On perusal of the purchase order placed by M/s. Jayashree Die Casting Pvt. Ltd. it is not found that the said purchase orders specifically indicate the items which needs to be manufactured and delivered by appellant and the rates for per piece of such items are also indicated - appellant had not rendered the services of Manpower Recruitment or Supply Agency services - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether the activity of converting aluminium ingots to various aluminium articles in the factory premises amounts to supply of manpower or not.
- Whether such services are taxable in the hands of the appellant.

Analysis:
1. The appellant deployed personnel in a factory for converting aluminium ingots to aluminium castings and charged labour charges. Authorities viewed it as "Manpower Recruitment and Supply Agency services," demanding tax, interest, and penalties. The appellant contested, discharged tax liability, and argued the activity was manufacturing beyond service tax. The Tribunal cited precedents where similar activities were not considered manpower services.

2. The Departmental Representative argued that the appellant supplied skilled personnel, making it taxable under manpower services. However, invoices showed charges based on output, not manpower supply. Lack of evidence indicated the appellant was not in the business of supplying manpower services.

3. The Tribunal found the appellant's activity was manufacturing, not manpower supply. The Tribunal referred to a similar case where it was held that converting ingots to castings was manufacturing, not manpower supply. The Tribunal set aside the lower authorities' decision, ruling in favor of the appellant.

4. The appellant's job work involved converting ingots to castings based on production output, not manpower supply. The Tribunal held that as the activity amounted to manufacturing, it was not taxable under manpower services. The Tribunal referred to a judgment exempting such activities under specific notifications.

5. Considering the facts and precedents, the Tribunal found the lower order unsustainable and ruled in favor of the appellant. The impugned order was set aside, and the appeal was allowed with consequential relief.

This detailed analysis of the judgment highlights the key issues, arguments, and the Tribunal's decision, providing a comprehensive overview of the legal proceedings and outcome.