2020 (1) TMI 309 - AT - Service Tax

Classification of service - Man Power Supply and Recruitment Service or not - job assigned to the appellant for compressing and filling of gas in the cylinder by the help of the Man Power deputed by the appellant - HELD THAT - The job assigned to the appellant is for gas filling in the cylinder, cylinder handling, cylinder loading and unloading dispatch of cylinder etc. The charges for the said job is ₹ 1 per EU meter of oxygen and Nitrogen gas filled in the cylinder either through compressor of though liquefied pump. The terms of the contract clearly show that even though the appellant deputed the employees in the factory of M/s. Inox Air Products Ltd for doing the aforesaid job but the service recipient is concern about the job assigned to the appellant i.e. filling of gas in the cylinder, cylinder handling, cylinder loading and unloading etc. The service recipient is not making any payment toward the wages/salary of the employee for the job assigned to the appellant. All the employees are working under supervision and control of the appellant and not under the supervision of M/s. Inox Air Products Ltd. The service recipient M/s. Inox Air Products Ltd is not concern about all the statutory obligation. They are only obliged to make the payment as per the quantum of gases filled in the cylinder by the appellant s employee. This arrangement shows that the appellant have not supplied the Man Power to qualify under the head of service -supply of Man Power and Recruitment service, they have provided the job of filling the gas in the cylinder, handling, loading and unloading etc, therefore, the activity of the appellant is pre-dominantly appears to be covered under production for processing of goods on behalf of the client. However, in the given fact the service is not covered under Man Power supply and Recruitment Service. The appellant have not provided the service of Man Power Supply and Recruitment Agency Service - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of service tax liability for Man Power Supply Services provided by the appellant to a manufacturing company.

Detailed Analysis:
1. The case involved a dispute regarding the service tax liability of the appellant, a service provider, who supplied Man Power Services to a manufacturing company engaged in the production of gases. The audit party contended that the appellant should have obtained service tax registration and paid service tax for the services provided, leading to the issuance of a show cause notice demanding service tax and penalties under relevant sections of the Finance Act, 1994.

2. The appellant argued that they were not providing Man Power Supply Services but were engaged in a specific activity of compressing and filling gas in cylinders for the manufacturing company. The charges were based on the quantity of gas filled, not on the basis of Man Power or Man hour. They cited a previous judgment to support their claim that their service was related to the production or processing of goods on behalf of the client, not for the supply of Man Power.

3. The Revenue, represented by the Authorized Representative, supported the findings of the impugned order and referenced previous judgments to justify their position on the matter.

4. Upon reviewing the contract between the appellant and the manufacturing company, the Tribunal observed that the job assigned to the appellant primarily involved filling gas in cylinders, handling cylinders, loading and unloading, and dispatching cylinders. The charges were based on the quantity of gas filled, irrespective of the labor involved. The employees were under the supervision and control of the appellant, and the manufacturing company was only concerned with the specific job of gas filling, not with the employment aspects. The Tribunal concluded that the appellant's service did not qualify as Man Power Supply and Recruitment Service but rather as production or processing of goods on behalf of the client, as per the terms of the contract and the nature of the services provided.

5. Consequently, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant. The judgment emphasized that the appellant did not provide Man Power Supply and Recruitment Agency Service, thereby rendering the demand for service tax under that category unsustainable.

This detailed analysis of the judgment highlights the key arguments presented by both parties, the Tribunal's assessment of the contract terms and service nature, and the final decision in favor of the appellant based on the interpretation of the services provided.