2024 (5) TMI 134 - AT - Service Tax

Classification of service - Manpower Recruitment and Supply Agency Service or not - services received from the contractor M/s. A.M Enterprise who was engaged in undertaking various odd jobs including packing of loose Cement at the appellant plant - payment made to contractor - HELD THAT - Reliance placed upon CBEC Circular No. 190/9/2015-ST dated 15.12.2015 and various case law most specifically on 2024 (4) TIM 233-CESTAT-AHMEDABAD in the matter of SHRI DAYANAND MISHRA VERSUS COMMISSIONER OF CENTRAL EXCISE ST, RAJKOT 2024 (4) TMI 233 - CESTAT AHMEDABAD , which in turn relied upon the decision of ROOPSINH JODHSINH CHAUHAN AND NAVALSINH JADEJA VERSUS COMMISSIONER OF CENTRAL EXCISE ST, RAJKOT 2023 (11) TMI 102 - CESTAT AHMEDABAD which has held that when the contract between the service provider is admittedly a contract of manufacturing or any process thereof, then engagement of labour will not make it as manpower supply. The matter is no more res integra and the impugned service cannot be held as Manpower Recruitment and Supply Agency Service simply because of the basis of making payment to the contractor. Appeal allowed.

Summary

Issues involved: Determination of liability to pay service tax under reverse charge basis on services received from a contractor engaged in odd jobs, specifically packing of loose Cement at the appellant plant.

Summary:
The appeal before the Appellate Tribunal CESTAT Ahmedabad revolved around the question of whether the appellant was liable to pay service tax under reverse charge basis for services received from contractor M/s. A.M Enterprise, engaged in various odd jobs including packing of loose Cement at the appellant plant. The period in question was from April 2012 to March 2014, with a show cause notice issued on 21.04.2014. The department contended that the services provided constituted Manpower Supply Service, as the packing services were paid at a piece rate per tonne, incorporating the minimum wage rate. On the other hand, the appellant argued that the services rendered were packing services through a contractor who engaged labor to perform the work, with payment inclusive of the minimum wage of the personnel engaged through the contractor.

The department, represented by the learned AR, relied on the impugned order to support the demand. The appellant's advocate highlighted the statement of the General Manager dated 17.04.2014, emphasizing that the contractor was obligated to perform packing only, not supply Man Power. Reference was made to CBEC Circular No. 190/9/2015-ST dated 15.12.2015 and various case laws, including those of SHRI. DAYANAND MISHRA VS. CST & ST-RAJKOT, ROOPSINGH JODSINGH CHAUHAN AND NAVALSINGH JADEJA VS. CCE & ST, RAJKOT, among others. These cases established that engagement of labor in a contract of manufacturing or any process thereof does not constitute manpower supply. Based on the applicable Board circular and recent case law, the Tribunal concluded that the impugned service could not be categorized as Manpower Recruitment and Supply Agency Service solely based on the payment structure to the contractor.

Consequently, the appeal was allowed, granting consequential relief to the appellant. The decision was pronounced in the open court on 30.04.2024.