2022 (11) TMI 290 - AT - Service Tax

Classification of services - manpower recruitment agency services or not - agreement with the appellant for packing and salvaging activities - HELD THAT - On going through the relevant contract entered into by Appellant with M/s Pino Bisazza Glass Pvt. Ltd and find that M/s. Pino has entered into agreement with the appellant for packing and salvaging activities. The appellant was paid for carrying out such activities on per Kgs / Per Metric Ton basis. The workmen deployed by the appellant for carrying out such activities were under the supervision and control of the appellant. M/s Pino, who entrusted the job contract to the appellant was no way concerned with the workmen deployed by the appellant. Since there is no specific mention about deployment of labour/work force, the services provided by the appellant should not fall under the taxable category of manpower recruitment or supply agency service. Further, the rate contract provided in the work order clearly indicates that the amount shall be paid at a fixed basis i.e. on per kgs /per metric ton basis. Since there is no specific mention about payment of reimbursement of wages and salaries to the workman, the services provided shall not fall under such taxable category of service. It cannot be said that the appellant had provided the Manpower Recruitment and Supply Agency Service - the service tax demands confirmed on the appellant cannot be sustained. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Appellant providing Labour Contract Services without service tax registration.
2. Service tax demand, interest, and penalties imposed on the Appellant.
3. Contention regarding the classification of services provided by the Appellant.
4. Interpretation of the contract between the Appellant and M/s Pino Bisazza Glass Pvt. Ltd.
5. Determination of whether the services provided fall under the category of manpower recruitment agency service.

Analysis:
1. The Appellant, M/s. Matadin Mali, appealed against the Order-in-Appeal demanding service tax, interest, and penalties for providing Labour Contract Services without service tax registration. The turnover exceeded Rs. 4 Lakhs during a specific period, leading to the issuance of a show cause notice under relevant sections of the Finance Act, 1994.

2. The Appellant contested the issue on merits, appearing for a personal hearing, but the adjudicating authority confirmed the service tax demands, interest, and penalties. The appeal against the Order-in-Original was also rejected by the Ld. Commissioner (Appeals), prompting the Appellant to approach the Tribunal.

3. The Appellant argued that the services provided did not fall under the taxable category of manpower recruitment or supply agency service. They highlighted the nature of the agreement with M/s Pino, emphasizing the payment basis and lack of specific mention regarding deployment of labor/work force for services provided.

4. Upon reviewing the contract between the Appellant and M/s Pino, the Tribunal observed that the workmen were under the supervision and control of the Appellant, with no direct involvement of M/s Pino in the workforce deployment. The contract specified payment on a fixed basis per kgs/per metric ton, without reimbursement of wages and salaries to the workmen.

5. Considering the contractual terms and the lack of evidence supporting the classification of services as manpower recruitment agency service, the Tribunal concluded that the services provided by the Appellant did not fall under the taxable category. Consequently, the service tax demands confirmed on the Appellant were deemed unsustainable, leading to the allowance of the appeal in favor of the Appellant with consequential relief.

Conclusion:
The judgment by the Appellate Tribunal CESTAT Ahmedabad, delivered by Hon'ble Member (Judicial) Mr. Ramesh Nair and Hon'ble Member (Technical) Mr. Raju, ruled in favor of the Appellant, setting aside the service tax demands imposed, based on the interpretation of the contract and the nature of services provided, ultimately determining that the services did not qualify as manpower recruitment agency services.