2019 (4) TMI 1917 - AT - Service Tax

Classification of services - Manpower Recruitment and Supply Agency Service or not - appellant is engaged as a contractor for carrying out the manufacturing activities of PP/HDFE fabrics on rate contract basis - HELD THAT - M/s. Dhoot Compack Ltd. has entered into agreement with the appellant for manufacture of fabrics on job work basis. The appellant was paid for carrying out such activities on per meter basis. The workmen deployed by the appellant for carrying out such activities were under the supervision and control of the appellant. The ultimate manufacturer, who entrusted the job to the appellant was no way concerned with the workmen deployed by the appellant. It is also noticed that over and above paying the amount for manufacturing activities undertaken by the appellant on job work basis, the said service receiver had not paid any specific price to the workmen deployed by the appellant. Thus, under such circumstances, it cannot be said that the appellant had provided the Manpower Recruitment and Supply Agency Service. The adjudged demands confirmed on the appellant cannot be sustained - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the appellant is liable to pay Service Tax under the category of "Manpower Recruitment and Supply Agency Service" for providing manufacturing services on a job work basis.

Analysis:
The appeal was filed against an order passed by the Commissioner of Central Excise and Customs, Nagpur, regarding the appellant's liability to pay Service Tax for providing manufacturing services on a job work basis for M/s. Dhoot Compack Limited. The appellant was engaged as a contractor for manufacturing PP/HDFE fabrics on a rate contract basis. The Central Excise officers alleged that the appellant did not discharge the Service Tax liability under the category of "Manpower Recruitment and Supply Agency Service." Show cause proceedings were initiated, resulting in a confirmed Service Tax demand, interest, and penalties imposed on the appellant. The Commissioner (Appeals) upheld the demands, leading to the appeal before the Tribunal.

The appellant argued that the workmen deployed for manufacturing activities were under their control and supervision, and the consideration received was on a per meter basis. Thus, they contended that the services provided should not be categorized as "Manpower Recruitment and Supply Agency Service" for Service Tax purposes. The appellant relied on a previous Tribunal decision in support of their argument. On the other hand, the Revenue's representative supported the findings in the impugned order.

After considering the submissions and examining the records, the Tribunal found that M/s. Dhoot Compack Ltd. had an agreement with the appellant for manufacturing fabrics on a job work basis. The payment was made on a per meter basis for the activities carried out by the appellant's workmen under their supervision and control. The manufacturer who engaged the appellant had no involvement with the workmen. Additionally, the service receiver did not pay any specific amount to the workmen directly. Therefore, the Tribunal concluded that the appellant did not provide "Manpower Recruitment and Supply Agency Service" as alleged, and the confirmed demands could not be sustained.

Consequently, the Tribunal held that there were no merits in the impugned order and allowed the appeal in favor of the appellant by setting aside the previous decision.