2022 (9) TMI 901 - AT - Service Tax

Classification of services - job work in the factory premises - engineering works as per drawings on the machines, tool provided by the contractors - Manpower Recruitment or Supply Agency Service or under job work service - responsibility of the appointed workers on the assigned work - HELD THAT - It is found that in the present dispute whether the service is of Manpower Recruitment or Supply Agency Service or job work can be decided only on the basis of the agreement entered between service provider and service recipient. As per the agreement in the present case, the service recipient is having their factory and carried out various manufacturing activities. The present appellant was assigned job work related to manufacturing on the basis of charges which is per piece basis and the item being manufactured by the appellant. As per terms and conditions of the agreement, the service recipient will provide all the facilities such as machines, tools, place etc. - whenever there is work, the charges will be paid by the service recipient to the appellant as per the rates decided i.e. per piece basis. Responsibility and control - HELD THAT - The entire control of workers deputed by the appellant for the job work is with the appellant only and the service recipient has no obligation as regards the number of workers, man-hour etc. for the job assigned to the appellant. In these terms of contract, we are of the clear view that contract is for job work carried out by the appellant for the service recipient. Therefore, there is no activity of providing the service of Manpower Recruitment or Supply Agency Service. In the case of MESSERS SUREEL ENTERPRISE PVT. LTD., M/S. SUREEL ENTERPRISE P. LTD. VERSUS C.C.E. S. T- AHMEDABAD-III 2019 (10) TMI 1245 - CESTAT AHMEDABAD wherein the similar facts are prevailing inasmuch as the service provider provided the manufacturing activity in the factory of service recipient with the help of his own workers and it was held that service is of not Manpower Recruitment or Supply Agency Service but it is job work. The appellant have not provided service of Manpower Recruitment or Supply Agency Service, hence the demand does not sustain - Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Classification of service as Manpower Recruitment or Supply Agency Service or job work service.

Detailed Analysis:
The issue in this case revolves around determining whether the service provided by the appellant falls under the category of Manpower Recruitment or Supply Agency Service or job work service. The appellant argues that the service should be classified as job work service based on the agreement terms. The appellant undertook job work in the factory premises of the service recipient, performing engineering works as per drawings on machines and tools provided by contractors. The charges for the job work were based on the product manufactured per piece. The appellant asserted that they held the responsibility for the appointed workers and the service recipient had no obligation towards them. The appellant relied on specific judgments to support their position.

The Revenue, represented by the Superintendent, reiterated the findings of the impugned order and cited judgments to support their stance. The Tribunal carefully considered the submissions from both parties and reviewed the agreement between the service provider and recipient. The agreement outlined that the service recipient provided facilities such as machines, tools, and place for manufacturing activities, with the appellant responsible for skilled, semi-skilled, and non-skilled workers as per drawings. The appellant was obligated to pay minimum wages to workers even during idle periods, with charges payable by the service recipient based on the work done. The Tribunal noted that the appellant bore all responsibilities for the appointed workers as per labor laws.

After analyzing the terms and conditions of the agreement, the Tribunal concluded that the service provided by the appellant constituted job work related to manufacturing. The appellant had control over the workers and the service recipient had no obligation regarding the number of workers or man-hours for the assigned job. The Tribunal found that the appellant's service did not qualify as Manpower Recruitment or Supply Agency Service based on the agreement terms and control over the workers. The judgments cited by the appellant supported this interpretation, emphasizing the similarity in facts with the present case. In contrast, the Tribunal determined that the judgments relied upon by the Revenue were not applicable due to differing circumstances.

Therefore, the Tribunal ruled in favor of the appellant, setting aside the impugned orders and allowing the appeals. The judgment highlighted the importance of analyzing the specific terms of the agreement to determine the classification of services accurately. The decision was pronounced in the open court on 19.09.2022.