2018 (7) TMI 1382 - AT - Service Tax

Manpower Recruitment and Supply Agency Service - respondent had been engaged by M/s Alpha for in house fabrication work during the period 01/04/2011 to 05/09/2011, for which consideration was received by the respondent - Held that - It is observed that the employees of the respondent are required to work as per the directions of M/s Alpha who supply the required drawing, raw materials and machines. These employees are carrying out fabrication work in the premises of M/s Alpha and are paid for such work on the basis of the quantum of goods fabricated - In the case of Shivashakti Enterprises 2015 (12) TMI 682 - CESTAT MUMBAI where this bench in the case of Shriram Sao TVS Ltd. 2015 (4) TMI 38 - CESTAT MUMBAI , in a similar kind of service of lump sum contract for harvesting, loading and unloading of sugarcane is not manpower supply service. Demand cannot sustain - appeal dismissed - decided against Revenue.

Summary

Issues:
- Liability of Service Tax under 'Manpower Recruitment and Supply Agency Service' for in-house fabrication work.
- Interpretation of the absence of a written contract between the service provider and the service receiver.
- Consideration of payment basis for the service provided.
- Application of CBEC Circular and relevant case laws.

Analysis:
- The appeal was filed by Revenue against the Order-in-Appeal No. 214/2015, challenging the decision that the respondent was not liable to pay Service Tax for in-house fabrication work done for M/s Alpha Services. The Department contended that the respondent should pay Service Tax under the category of 'Manpower Recruitment and Supply Agency Service'. The Original Adjudicating Authority had ordered the payment of Service Tax, but the Commissioner (Appeal) set aside the demand, leading to the current appeal by Revenue.

- The Revenue argued that the respondent provided manpower to M/s Alpha Services, and the consideration received for the services was evident. They contended that the Commissioner (Appeals) erred in concluding that no Service Tax was payable.

- The respondent's advocate justified the Commissioner's decision, emphasizing the absence of a written contract between the parties. He highlighted that payments were based on the weight of goods manufactured, and pointed to a Certificate from M/s Alpha Services specifying the work carried out by the respondent. Furthermore, he referenced a CBEC Circular and relevant case laws supporting the argument that when the value of service is based on the quantum of job work undertaken, it does not constitute supply of manpower.

- Upon review, the Tribunal noted the absence of a written contract between the parties and examined the Certificate of Work issued by M/s Alpha Services. It was certified that the respondent was engaged in manufacturing cranes and sub-assemblies, with payments based on the weight of finished goods. The employees of the respondent worked under the direction of M/s Alpha, using their materials and machinery for fabrication work.

- Referring to a previous case, the Tribunal found that the issue was not new and cited precedents where similar arrangements were considered lump sum agreements rather than supply of manpower. Following the Tribunal's earlier decision, the impugned order was upheld, and the appeal by Revenue was rejected.

Therefore, the Tribunal upheld the decision that no Service Tax was payable for the in-house fabrication work, considering the nature of the agreement between the parties and the basis of payment for the services provided.