2019 (1) TMI 776 - AT - Service Tax

Liability of Service Tax - Security Services - Held that - Revenue has not advanced any evidence to reflect upon the fact that the assessee was actually supplying the Manpower to Nagar Nigam. The various contracts and agreements entered by the respondents with Nagar Nigam clearly show that the work required to be done by them was the lump-sum work of cleaning for which purpose they were being paid. The workers deployed by them are clearly working on behalf of the assessee himself and they are not under the supervision or control of the service recipient. Thus, in the absence of any agreement to utilize the services of an individual, assessee cannot be said to have provided Manpower Recruitment or Supply Agency Services. Appeal dismissed - decided against Revenue.

Summary

Issues:
Interpretation of service tax liability for providing security services and manpower supply services.

Analysis:
The case involved a dispute regarding the service tax liability of an assessee registered with the Service Tax Department for providing "Security Services." The Revenue alleged that the assessee was providing Manpower Supply services to a municipal corporation. The Revenue initiated proceedings against the assessee, raising a demand for duty for a specific period. The Original Adjudicating Authority passed an order in favor of the Revenue. However, the Appellate Authority set aside this order, leading to the Revenue filing the present appeal.

The Commissioner (Appeals) favored the assessee by referring to the definitions of 'Manpower Recruitment or Supply Agency' and 'Taxable Services' under the Finance Act. The Commissioner analyzed the agreements between the assessee and the municipal corporation, along with the bills raised, to establish that the work involved cleaning services as per an approved plan. The responsibility for executing the work lay with the assessee, as per the agreements. The Commissioner also considered a certificate from the municipal corporation certifying the execution of work through contractors. The bills raised indicated the work done by workers under the supervision of the assessee. The Commissioner concluded that the essence of the contract was the execution of work, benefiting both parties.

The Commissioner also referred to a circular regarding the contractual employment of individuals by a manpower supplier. The assessee declared that they engaged workers from outside on a daily wage basis, not employing permanent workers for the work. Relying on precedent cases, the Commissioner held in favor of the assessee, emphasizing that the workers were not contractual workers employed by the assessee.

The Revenue failed to provide evidence that the assessee was supplying manpower to the municipal corporation. The contracts and agreements indicated that the workers were working on behalf of the assessee and not under the control of the service recipient. Previous tribunal decisions supported the conclusion that in the absence of an agreement to provide individual services, the assessee could not be considered a Manpower Recruitment or Supply Agency. The Tribunal rejected the Revenue's appeal, as no individual workers were being supplied by the assessee, and the cleaning job was the primary focus of the contract.

In conclusion, the Tribunal upheld the decision in favor of the assessee, highlighting that the agreements did not involve the supply of individual workers and that the workers were solely engaged in cleaning activities. The Revenue's appeal was rejected, and the case was disposed of accordingly.