2018 (9) TMI 188 - AT - Service Tax

Refund of Service tax paid - rejection on the ground that the appellant himself is the manufacturer of the liquor and the contractor was not manufacturing the liquor on behalf of the appellant - whether the services provided by the contractor were Manpower Supply Services or Bottling Services ? Held that - The said scope of the work required to be done by the persons supplied by the contractor clearly brings out the fact that the basic work of the contractor is to provide manpower to the manufacturing unit for carrying out various activities relatable to bottling of IMFL liquor. As such work is required to be carried out by the various persons supplied by the contractor under the supervision of the assesse s agents or their authorized persons. The same does not amount to carrying out job-work activity by the contractor - We have also scrutinized the contract and the rate list entered into between the appellant and their contractor. The same prescribes rates on per shift basis, though the expected standard production in that shift also stands mentioned in the said contract. Further the overtime rates also stands mentioned in the said list, thus indicating that if the manpower supplied by the contractor works overtime, he would be given further wages for the same. This only establishes that the essence of the contract is for supply of labour, who is expected to perform a particular task in the particular period. Appellant was receiving Manpower Supply Services from the contractor and has correctly discharged the Service Tax, on reverse charge basis - appeal dismissed - decided against appellant.

Summary

Issues:
Refund of Service Tax paid for manpower supply services; Classification of services as 'Manpower Supply Services' or 'Bottling Services'.

Analysis:
1. The appellant, engaged in manufacturing IMFL liquor, filed refund claims for Service Tax paid to a contractor for manpower supply services, contending that the services provided were not 'Manpower Supply' but part of the manufacturing process.
2. The Assistant Commissioner rejected the refund claims citing time bar and the appellant being the actual manufacturer of liquor, thus justifying the Service Tax payment.
3. The appellant appealed to the Commissioner(Appeals) based on legal precedents stating that bottling activities constitute manufacturing and are exempt from Service Tax.
4. The Commissioner(Appeals) upheld the Service Tax payment, leading to the appeal before the Tribunal.
5. The Tribunal noted the High Court decisions exempting bottling from Service Tax but focused on determining whether the services were 'Manpower Supply Services' or 'Bottling Services'.
6. Contracts between the appellant and the contractor outlined tasks related to bottling liquor, labeling, packaging, and other activities, indicating a manpower supply arrangement supervised by the appellant.
7. The appellate authority analyzed the contracts, concluding that the contractors provided labor supply services, not job-work or manufacturing services.
8. Citing Tribunal cases, the appellate authority emphasized the control and supervision exercised by the appellant over the labor supplied, indicating a manpower supply relationship.
9. The rate list in the contract, based on shifts and overtime rates, reinforced the nature of labor supply services provided by the contractor under the appellant's control.
10. The Tribunal upheld the Service Tax payment, ruling that the services received were 'Manpower Supply Services,' affirming the decisions of the lower authorities.

This detailed analysis of the judgment highlights the key legal arguments, precedents, and contractual terms considered in determining the classification of services and the applicability of Service Tax in the case.