2023 (8) TMI 249 - AT - Service Tax

Classification of services - Manpower Recruitment or Supply Agency Services - failure to obtain Service Tax registration and making periodical payment of Service Tax - HELD THAT - In the definition of Manpower Recruitment or Supply Agency Services, it is clear that only in case where an assessee provides the manpower to the service recipient and the service recipient himself get the required job done from such manpower, under his supervision and the service charge paid by the service recipient on the basis of number of manpower, man hours to the service provider, then only such activity can be categorized under Manpower Recruitment or Supply Agency Services - From the invoice it can be seen that the job under taken by the appellant is sorting, shifting and cleaning of container s materials and the charges for the same was claimed 1 rupee per kg basis. This clearly shows that the service recipient is not concern about the number of manpower deputed for the job, whereas the service recipient has assigned the job to the appellant only in respect of sorting, shifting and cleaning of container s materials. The control of the manpower in this fact is obviously with the appellant and not with the service recipient. In this fact it is clear that the appellant have not provided the services of Manpower Supply or Recruitment Agency Services , this fact of the case is not under dispute as on this basis only the Adjudicating Authority has dropped the proceeding initiated in the show cause notice. This issue has come up time and again before this Tribunal. This Tribunal in the case of RITESH ENTERPRISES VERSUS COMMISSIONER OF CENTRAL EXCISE 2009 (10) TMI 182 - CESTAT, BANGALORE has held that as per the master circular dated 23.8.2007 would be appropriate in the case where services of manpower recruitment and supply agency had been temporarily taken by the business or the industrial association for supplying of manpower and may/may not be for execution of a specific work. Therefore, the reliance placed by the adj. authority on the said circular would not carry the case of the revenue any further. Thus impugned order set aside. The appellant have not provided the Manpower Recruitment or Supply Agency Services . Therefore, the demand made under the said category is not sustainable - Appeal allowed.

Summary

Issues Involved:
1. Classification of services provided by the appellant.
2. Applicability of Service Tax registration and payment.
3. Validity of the demand for Service Tax, penalties, and interests.

Summary:

Issue 1: Classification of Services Provided by the Appellant
The primary issue was whether the services provided by the appellant to M/s Senor Metals Pvt. Ltd. should be classified under "Manpower Recruitment or Supply Agency Services." The appellant contended that they undertook the job of unloading scrap and sorting it, charging per kilogram, without supplying manpower to the recipient. The control of manpower was with the appellant, not the service recipient, which disqualifies it from being categorized under "Manpower Recruitment or Supply Agency Services." The Tribunal agreed, noting that the service recipient was not concerned with the number of manpower deputed but only with the job's completion.

Issue 2: Applicability of Service Tax Registration and Payment
The appellant did not obtain Service Tax registration or make periodical payments, as they believed their services did not fall under the taxable category. The Adjudicating Authority initially dropped the proceedings, agreeing with the appellant's classification. However, the Commissioner (Appeals) later allowed the revenue's appeal, except for the penalty under Section 76.

Issue 3: Validity of the Demand for Service Tax, Penalties, and Interests
The Tribunal reviewed the definition of "manpower recruitment or supply agency" and concluded that the appellant's activities did not meet the criteria since the service recipient did not supervise the manpower. The Tribunal referenced several judgments, including Ritesh Enterprises, Sureel Enterprises Pvt. Ltd., and Nishkarsh Industries Services, which supported the appellant's position that their activities amounted to contract work, not manpower supply. Consequently, the demand for Service Tax under the said category was deemed unsustainable.

Conclusion:
The Tribunal set aside the impugned order, upheld the Order-in-Original, and allowed the appeal filed by the appellant, concluding that the appellant had not provided "Manpower Recruitment or Supply Agency Services" and thus was not liable for the demanded Service Tax.