2018 (6) TMI 1363 - AT - Service Tax

Man Power Recruitment and Supply Service - case of appellant is that they are not commercial concern - Held that - The works contracted by BHEL to the appellant were Material Handling Contract and Mobile Crane Contract . Perusal of the work schedule rates and approximate quantum of work to be handled given in the annexures to the contract indicates that the rates are per M.T or per Sq. mtr. etc., but not on per man power supplied basis - the work contracted by BHEL to the appellant will not have essential characteristics of man power supply service. True, the appellants supplied labourers to actualise the contracted work. However such man power is not at the disposal or effective control of the service recipient during the period of contract, but such control is still with the appellants themselves. The nature of services provided cannot then be brought within the fold of Man Power Supply Service. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Proceedings initiated against appellants for providing Man Power Recruitment and Supply Service to Bharat Heavy Electricals Ltd. (BHEL) under three different contacts. Original authority confirmed tax demand, interest, and penalties under various provisions of law. Commissioner (Appeals) set aside penalties under Section 76 & 77 but upheld remaining order. Appellants appealed against the decision.

Analysis:
1. Allegation and Proceedings: Proceedings initiated against appellants for providing Man Power Recruitment and Supply Service to BHEL under three contracts. Show cause notice proposed demand of ?8,15,145 with interest and penalties under various provisions. Original authority confirmed tax demand, interest, and penalties. Commissioner (Appeals) set aside penalties under Section 76 & 77 but upheld the rest. Appellants appealed.

2. Arguments and Submissions: Appellants argued contracts with BHEL were only for material handling and mobile crane, not man power supply. Relied on Board's circular and previous decisions supporting their stance. Respondent supported impugned order, stating appellants only argued they were not a commercial concern.

3. Judicial Analysis: Contracts with BHEL were for "Material Handling" and "Mobile Crane" work, not man power supply. Rates based on work done, not per man power supplied. Manpower not under recipient's control but appellants'. Board's circular postdates impugned order, allowing appellants to raise legal plea anytime.

4. Precedents and Decisions: Bench referred to previous cases where contracts for specific work, not man power supply, were considered. Contracts focused on work execution, not supplying manpower. Employees under appellants' control, not recipient's. Upheld appellants' arguments based on previous tribunal decisions.

5. Final Decision: Bench found in favor of appellants, setting aside impugned order. Contracts were for specific work, not man power supply. Appellants' control over employees and nature of work supported their stance. Appeal allowed with consequential benefits as per law.

This detailed analysis highlights the key issues, arguments, judicial reasoning, and final decision of the Appellate Tribunal CESTAT CHENNAI regarding the case involving allegations of providing Man Power Recruitment and Supply Service to BHEL.