2020 (1) TMI 1643 - AT - Service Tax

Classification of services - manpower recruitment and supply agency service or renting of immovable property service - mobilizing, arranging and supply of manpower and the payments that were made to the gangs - HELD THAT - Brief facts of engaging the gangs for cutting the sugarcane is explained by the ld. counsel for the appellants. From such facts, it is not found that the appellants are engaging labourers for cutting the sugarcane. In fact, there is also no evidence to show that the appellants are receiving any consideration for providing manpower recruitment and supply agency service. The decision rendered by the Tribunal in the case cited by the ld. counsel for the appellant in M/S. THE AMARAVATHI CO-OPERATIVE SUGAR MILLS LTD VERSUS CCE ST, COIMBATORE 2018 (7) TMI 1837 - CESTAT CHENNAI has analysed the very same issue and held in favour of the assessee. Appeal allowed.

Summary

Issues:
1. Whether the appellants are liable to pay service tax under the category of manpower recruitment or supply agency service.

Analysis:
The judgment by the Appellate Tribunal CESTAT Chennai involved a case where the appellants, engaged in sugar and molasses manufacturing, were alleged to be providing manpower recruitment and supply agency services. The appellants had divisional offices for registration of cane growers and supply of cane seeds, with specialized gangs identifying ripe sugarcane for cutting. The department claimed that payments made to these gangs were liable for service tax under manpower recruitment and supply agency service. A Show Cause Notice was issued for the period 2007-08 to 2011-12. The original authority confirmed the demand under manpower recruitment service but reduced the demand for renting immovable property service. The appellant challenged this decision.

The appellant argued that they were not providing manpower recruitment services, as alleged by the department. They contended that they were solely focused on sugar and molasses production, with agreements in place with farmers and gangs for cutting sugarcane to ensure a raw material supply. The appellant did not collect any separate consideration for these services, as the payments to gangs were adjusted in the final bill paid to the farmers. The appellant cited a Tribunal decision in a similar case to support their argument. They also clarified that they were not contesting the demand related to renting of immovable property service.

After hearing both sides, the Tribunal analyzed the facts presented. They found no evidence that the appellants were engaging laborers for cutting sugarcane or receiving consideration for providing manpower recruitment services. The Tribunal referred to the previous decision cited by the appellant, which ruled in favor of the assessee in a similar context. Consequently, the Tribunal concluded that the demand could not be sustained. The impugned order was set aside, and the appeal was allowed with any consequential relief.