2018 (6) TMI 586 - AT - Service Tax

Man Power Recruitment of Supply Agency Service - the respondents have supplied manpower to M/s. SCPL during the period 2007-08 to 2011-12 but they neither registered with the Department nor paid Service Tax - Held that - It is settled principal that where the service is only relating to supply of manpower then the said manpower shall work under the supervision to whom the manpower has been supplied - But this is not the case here because in the instant case the manpower remained in control of the respondents and M/s. SCPL has not having any control/ supervision on the said manpower. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Whether the respondents are liable to pay Service Tax under the category of "Man Power Recruitment of Supply Agency Service" for supplying manpower to a company.
2. Whether the nature of work performed by the respondents for the company constitutes job work or falls under the definition of taxable service for Service Tax liability.
3. Whether the control and supervision of the manpower supplied by the respondents to the company determine the liability for Service Tax.

Issue 1:
The Department issued show cause notices to the respondents demanding Service Tax for supplying manpower without registration or payment under the "Man Power Recruitment of Supply Agency Service." The appeals were filed against the orders confirming the Service Tax demand. The Department argued that the respondents' activities fell within the taxable service definition under Section 65(105)(k) and 65(68) of the Finance Act, 1994. The respondents' counsel contended that the work performed was job work for the principal manufacturer, exempting them from Service Tax liability.

Issue 2:
The agreement between the respondents and the company specified the nature of work, including tasks related to manufacturing activities. The respondents were paid based on the quantity of work completed, and the workers were under the control and supervision of the respondents. The Tribunal analyzed the agreement and invoices to determine the essence of the contract, emphasizing that the nature of the work executed was crucial in deciding the Service Tax liability.

Issue 3:
The Tribunal considered the control and supervision aspect to establish liability for Service Tax. It noted that the manpower supplied by the respondents worked under their control, not the company's supervision. Referring to previous Tribunal decisions and Supreme Court judgments, the Tribunal emphasized interpreting the agreement's tenor to understand the parties' roles. Based on the facts and legal precedents, the Tribunal dismissed the Department's appeal, concurring with the Commissioner's decision.

In conclusion, the Tribunal's judgment clarified the liability for Service Tax concerning the supply of manpower, emphasizing the nature of work performed, control, and supervision aspects. The decision highlighted the importance of interpreting agreements to determine the essence of the contract and whether the services provided fall within the taxable service definition. The dismissal of the Department's appeal affirmed the Commissioner's decision based on legal principles and factual analysis.