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2024 (4) TMI 233 - AT - Service TaxClassification of services - Manpower Recruitment or Supply Agency Service or not - providing temporary manpower to carrying out a specific task i.e. inspection, loading and dispatch, production and sorting of materials etc. in the factory premises of M/s. Senor Metals Pvt. Limited - HELD THAT - The matter is no longer res-integra as this Tribunal in a similar case has held that the agreement is for execution of a particular work and not for providing any manpower. As per work contract the payment is paid for the work performed on the basis of per Kg of goods manufactured and therefore such an activity cannot be classifiable under the service category of Manpower Recruitment or Supply Agency Service. Tribunal in the case of ROOPSINH JODHSINH CHAUHAN AND NAVALSINH JADEJA VERSUS COMMISSIONER OF CENTRAL EXCISE ST, RAJKOT 2023 (11) TMI 102 - CESTAT AHMEDABAD has held that The work undertaken by the appellant do not fall under the service category of Manpower Recruitment or Supply Agency Service and therefore, the impugned orders are without any merit and are set aside. Thus, the service provided by the appellant does not fall under the category of Manpower Recruitment or Supply Agency Service and therefore, the impugned order-in-appeal is bad in law and the same is set-aside - appeal allowed.
Issues Involved:
1. Classification of services provided by the appellant. 2. Applicability of service tax under Section 73 of the Finance Act, 1994. 3. Imposition of penalties under Sections 77 and 78 of the Finance Act, 1994. Summary: Issue 1: Classification of Services Provided by the Appellant The department contended that the appellant provided "Manpower Recruitment or Supply Agency Service" to M/s. Senor Metals Pvt. Limited, as they were engaged in tasks such as inspection, loading, dispatch, production, and sorting of materials. The appellant argued that their services fell under "Business Auxiliary Service" as they were involved in production/processing of goods, which is exempt from service tax. The Tribunal found that the appellant's activities were for executing specific work contracts based on the quantity of goods manufactured, not for providing manpower, thus not classifiable under "Manpower Recruitment or Supply Agency Service." Issue 2: Applicability of Service Tax u/s 73 of the Finance Act, 1994 A show cause notice was issued demanding service tax of Rs. 3,04,830/- u/s 73 of the Finance Act, 1994. The original adjudicating authority dropped the demand, but the Commissioner (Appeals) reversed this decision, confirming the demand. The Tribunal, referencing previous similar cases, concluded that the appellant's activities did not fall under the taxable category of "Manpower Recruitment or Supply Agency Service" and thus, service tax was not applicable. Issue 3: Imposition of Penalties under Sections 77 and 78 of the Finance Act, 1994 The Commissioner (Appeals) imposed penalties u/s 77 and 78 but dropped the penalty u/s 76. The appellant argued that their belief in the non-taxability of their services was bona fide. The Tribunal, agreeing with the appellant's classification of services, set aside the penalties, stating that the impugned order-in-appeal was legally unsustainable. Conclusion The Tribunal held that the services provided by the appellant did not fall under "Manpower Recruitment or Supply Agency Service," thereby setting aside the impugned order-in-appeal and allowing the appeal.
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