2019 (2) TMI 1179 - AT - Service Tax

Classification of services - Manpower Recruitment and supply services or not - charges received in relation to the supply of labour to M/s. Caltex Gas India (P) Ltd. - Held that - The work is done as per the work orders issued by M/s. Caltex Gas India (P) Ltd. So also the payment is made in respect of each work order realized by M/s. Caltex Gas India (P) Ltd. from time to time. There is no whisper in the agreement that the payment has to be based on the number of persons or the man hours engaged for doing the work - Further, the workers who are taken by the appellant for executing the work order are under the control of the appellant and not under M/s. Caltex Gas India (P) Ltd. The agreement is very much evident to establish that the nature of activity does not fall within the definition of manpower recruitment and supply service - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the activity undertaken by the appellant falls under the category of Manpower Recruitment or Supply Service.

Analysis:
The case involved the appellants who held service tax registration for providing Manpower Recruitment and Supply Service to various companies. The department noticed that service tax was not paid on the supply of labor to one of the companies, leading to a demand notice. The original authority confirmed the demand, interest, and penalties, which was upheld by the Commissioner (Appeals), prompting the appeal.

The appellant argued that there was no requirement in the agreement to supply manpower to the specific company in question. They contended that the agreement was for executing work orders or job works, such as filling cylinders, and not for supplying labor. The appellant highlighted that the payment was based on the work executed, not on the number of workers engaged, and the workers were under their control, not the client's.

On the other hand, the department argued that the appellant had supplied laborers to the company based on the work carried out within the company's premises. The key issue was whether the activity undertaken fell under the category of Manpower Recruitment or Supply Service. Upon reviewing the master agreement, the Tribunal found that the payment was for the work executed, not based on the number of workers engaged, and the workers were under the appellant's control.

The Tribunal concluded that the nature of the activity did not align with the definition of manpower recruitment and supply service. Therefore, the demand of service tax under this category was set aside. The impugned order regarding the demand, interest, and penalty related to the amount received from the specific company was also set aside, and the appeal was allowed with consequential relief, if any.