2018 (1) TMI 1171 - AT - Service Tax

Labourers harvesting charges - Department took the view that these are services rendered by the assessee and are liable to service tax under the category of Man-power Recruitment or Supply Agency Services - Held that - the amendments in the definition of the services as well as the taxable event in the Finance Act, 1994 relating to Man-power Recruitment Supply Agency Services and has come to the correct conclusion that service tax liability cannot be hoisted on the assessee for the impugned period - reliance placed in the case of Commissioner of Customs, Central Excise and Service Tax, Aurangabad Vs Shri Samarth Sevabhavi Trust 2015 (3) TMI 1170 - BOMBAY HIGH COURT , where it was held that the respondent s work, though provided services to the sugar factory, did not come within the mischief of the term Manpower Recruitment or Supply Agency - appeal dismissed - decided against Revenue.

Summary

Issues:
Interpretation of the definition of "Manpower Recruitment or Supply Agency Services" under the Finance Act, 1994.

Analysis:
The case involved M/s. Dharani Sugars & Chemicals Ltd., engaged in sugar manufacturing, facing service tax liability for mobilizing and training laborers for harvesting sugarcane. The Department claimed these activities fell under Manpower Recruitment or Supply Agency Services. The Commissioner dropped the proceedings, leading to the Department's appeal. The Department argued that the activities fell within the service tax ambit, citing relevant sections of the Finance Act, 1994.

The Respondent's advocate argued that prior to a specific date, the tax liability applied only to commercial concerns providing such services. He referenced a judgment from the Bombay High Court to support the Commissioner's order. The Tribunal reviewed the matter and found it aligned with the Bombay High Court's judgment, emphasizing the definition of Manpower Recruitment or Supply Agency Services under the Finance Act, which did not encompass the labor supply for the sugar factory in this case.

The Tribunal highlighted the importance of the contract's nature between the Respondents and the sugar factory, emphasizing that no labor supply occurred, as required by the definition of Manpower Recruitment or Supply Agency Services. They also referenced a Supreme Court judgment to support their interpretation of the contract's terms. The Tribunal agreed with the Commissioner's analysis of the amendments in the Finance Act, 1994 and concluded that the service tax liability could not be imposed on the assessee for the period in question, ultimately dismissing the Department's appeal based on the Bombay High Court's judgment.

In conclusion, the Tribunal dismissed the Department's appeal, citing the alignment of the case with the Bombay High Court's judgment and the correct interpretation of the relevant provisions of the Finance Act, 1994. The judgment emphasized the absence of labor supply to constitute Manpower Recruitment or Supply Agency Services, leading to the dismissal of the Department's appeal.