2019 (3) TMI 1392 - AT - Service Tax

Classification of services - Manpower Supply and Agency Services or not - supply of labourers to M/s. Madras Steel Industries Pvt. Ltd. - period from 16.06.2005 to Oct. 09 - Held that - In the SCN it is alleged by Department that these processes do not amount to manufacture and that only if the process undertaken by the job worker amounts to manufacture would the activity fall under description of job work. This allegation of the department is without substance. There are several processes undertaken by job worker, which may not be in the nature of manufacturing activity. In the present case, the activities undertaken are heat treatment, gas cutting etc. From the invoices it is seen that job work charges are paid on the basis of nature of work carried out. The invoices show heat treatment charges, gas cutting charges etc. Thus, the payment is not based on man hours or as salary towards engagement of a person for doing work. The payment is made on piece rate basis depending upon the work done - The Tribunal in the case of M/s. Indira Industrial Labour Welfare Association 2018 (6) TMI 1363 - CESTAT CHENNAI had analysed a similar issue and held that job work is done on piece rate, and the same cannot be considered as Man-power Recruitment or Supply Agency Services. Demand cannot sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of services provided by the appellant as Manpower Recruitment or Supply Agency Services for engaging laborers in certain activities during the manufacture of steel castings.

Analysis:
The case involved a dispute regarding the classification of services provided by the appellant as either Manpower Recruitment or Supply Agency Services. The department alleged that the appellant engaged in supplying laborers to a manufacturing company for activities like hot blasting and gas cutting, which were classified as Manpower Supply and Agency Services. The original authority confirmed the demand for service tax, interest, and imposed penalties, a decision upheld by the Commissioner (Appeals), leading to the appeals before the Tribunal.

The appellant argued that they were job workers undertaking various processes like heat treatment and gas cutting for steel castings, not involved in manpower recruitment. They contended that the payments received were for specific job works done on a piece-rate basis, not as salaries for employees. The appellant cited relevant decisions to support their stance, emphasizing that the nature of work done did not constitute Manpower Recruitment or Supply Agency Services.

The Revenue's representative supported the department's findings, claiming that the appellant's activities did not result in a final product and were not manufacturing activities. They asserted that the appellant was indeed providing Manpower Recruitment or Supply Agency Services, as the activities were carried out within the manufacturer's premises and did not amount to manufacturing.

After hearing both sides, the Tribunal analyzed the nature of the activities undertaken by the appellant, such as hot blasting and gas cutting, and the payment method based on the work done. The Tribunal noted that the invoices specified charges for specific job works, not for man-hours or salaries, indicating a piece-rate basis for payment. Relying on precedent cases, the Tribunal concluded that the appellant's activities did not fall under Manpower Recruitment or Supply Agency Services but were job works done on a piece-rate basis. Consequently, the Tribunal set aside the demand, allowing the appeal with any consequential reliefs.

In conclusion, the Tribunal ruled in favor of the appellant, determining that the activities performed did not attract service tax under the category of Manpower Recruitment or Supply Agency Services, as they were job works paid on a piece-rate basis, not involving recruitment of laborers.