2023 (10) TMI 319 - AT - Service Tax

Classification of services - Cleaning Services or Manpower Supply Services? - supply of manpower for housekeeping i.e. cleaning of appellant s plant and office premises - HELD THAT - It is observed from the invoices of both the companies that they charged not only for service of cleaning but also for housekeeping tools, equipments, chemicals and consumables. From such contracts, it is held that none of the observed requirements of Manpower Supply Service stands fulfilled in the given set of the discussed circumstances. It is observed that both the service providers have nowhere mentioned to have been registered as Manpower Supply Services. Their invoices also identify them as an agencies involved in Housekeeping and Cleaning services. The invoices were also for provision of Housekeeping Services. It is clear from the contract and invoices that activities in question fall within the scope of cleaning activities as defined under Section 65(24b) of the Finance Act. It has been held in PANKAJ KUMAR VERSUS C.C.E. S.T. -RAIPUR CENTRAL EXCISE, CHHATTISGARH 2014 (12) TMI 1420 - CESTAT NEW DELHI that since the contractual production charges has been paid to the contractor on per metric tone basis, the contract for supply cannot fall under the definition of Manpower Supply. The findings of the adjudicating authority below are not correct. Just because some persons have been deployed by the service providing agency for providing Cleaning Services, the activity of Cleaning Services cannot be converted into the activity of providing manpower. The order is therefore set aside. Appeal allowed.

Summary

Issues involved: Determination of whether the services received are Cleaning Services or Manpower Supply Services under the Reverse Charge Mechanism (RCM).

Summary:

Issue 1: Classification of services received

The appellant, engaged in publishing a Daily Newspaper, was audited by the Audit Commissionerate, Raipur, for engaging two firms for supply of manpower for housekeeping. The service tax liability was proposed under the Reverse Charge Mechanism (RCM) as per Notification No. 30/2012-ST. The appellant contended that the services received were Cleaning Services, not Manpower Supply Services, and relied on legal precedents to support their argument.

Issue 2: Interpretation of contract terms

The department argued that the appellant availed Manpower Supply Services based on invoices and ledger comparisons. The adjudicating authority upheld the liability under RCM, considering the terms of the contract and previous tax payments by the service provider. The appellant disputed this interpretation, emphasizing the distinction between Cleaning Services and Manpower Supply Services.

Judgment:

The Tribunal analyzed the definitions of Cleaning Services and Manpower Supply Services under the Finance Act, 1994, and a relevant circular. It concluded that the services received by the appellant fell within the scope of Cleaning Services, not Manpower Supply Services. The contracts with the service providers indicated services related to cleaning and housekeeping, not recruitment or supply of manpower. The Tribunal set aside the order, noting the short payment of service tax liability and allowing the appeal.

Conclusion:

The Tribunal ruled in favor of the appellant, determining that the services received were Cleaning Services, not Manpower Supply Services. The appellant's liability under RCM was dismissed, and the Department was advised to take appropriate action against the service providers for any tax discrepancies.