2018 (3) TMI 1005 - AT - Service Tax

Man power recruitment or supply agency services or not - whether the activity of bagging and shipping work executed by the appellant as per the contract for bagging and shipping amounts to supply of man power or not? - Held that - The scope of the work is to execute bins filing, bagging, stitching, handling and dispatch of finished product on round the clock basis. The rates are fixed on tonnage basis. Thus it is seen from the contract that the work involves bagging and shipping of finished products. There is nothing in the contract to show that the appellant has any obligation to supply man power. Instead the contract speaks of execution of work. The employees are under the control and supervision of appellants for executing the work and not under the supervision of MFL. The appellant has discharged the statutory obligations of his workers which shows that they worked on behalf of appellant. The consideration is not paid by MFL on the basis of the number of persons employed but on the basis of work executed. A similar issue was analyzed by the Tribunal in the case of Bhaghyashree Enterprises 2017 (3) TMI 786 - CESTAT MUMBAI wherein the Tribunal had held the issue in favour of the assessee holding that such lump sum work order can be considered as job work activity. - amounts received by the appellant cannot be taxed under the category of Man Power Recruitment or Supply Services. Outdoor Catering Services - benefit of N/N. 1/2006-ST - Held that - this issue can be remanded to the adjudicating authority so as to give the appellant further opportunity to furnish documents in order to claim the abatement in terms of N/N. 1/2006-ST - matter on remand. Appeal allowed in part and part matter on remand.

Summary

Issues:
1. Whether the activity of bagging and shipping work executed by the appellant amounts to supply of man power.
2. Whether the appellant is entitled to abatement under Notification No.1/2006-ST for outdoor catering services.

Analysis:

Issue 1:
The appellant contested the demand of service tax under man power recruitment or supply agency services and outdoor catering services. The appellant argued that the contract with M/s. Madras Fertilizers Ltd. was for bagging and shipping operations on a tonnage basis, not for supplying manpower. The contract did not specify the number of workers or pay based on hours worked. The appellant maintained that the services provided were job work, not man power recruitment. The Tribunal analyzed the contract terms and found no obligation for the appellant to supply manpower. The employees were under the appellant's control, and the payment was based on work executed, supporting the conclusion that it was job work, not man power supply. Citing precedent cases, the Tribunal ruled in favor of the appellant, setting aside the demand for Man Power Recruitment or Supply Agency Services.

Issue 2:
Regarding outdoor catering services, the appellant did not dispute the liability but sought abatement under Notification No.1/2006-ST, which was not considered by the authorities. The appellant requested a remand to establish the claim of abatement. The Tribunal agreed to remand this issue to the adjudicating authority to allow the appellant to provide necessary documents for claiming abatement under the notification. The appeal was partly allowed, setting aside the demand for Man Power Recruitment or Supply Agency Services and remanding the issue of Outdoor Catering Services for further consideration of abatement eligibility under Notification No.1/2006-ST.

In conclusion, the Tribunal ruled in favor of the appellant on the issue of Man Power Recruitment or Supply Agency Services, while remanding the issue of Outdoor Catering Services for further assessment of abatement eligibility. The decision provided detailed analysis of the contract terms, payment structure, and control over employees to determine the nature of services rendered by the appellant.