2024 (9) TMI 693 - AT - Service Tax

Classification of service - Manpower Recruitment or Supply Agency Service or not - assisting fire safety service to handle any emergency arising at the client s premises and to maintain fire and safety equipments in working condition - HELD THAT - The annual contract was for assisting fire fighting and to handle any emergency arising due to fire incidence in the complex of M/s. Chambal Fertilizers and Chemicals Limited and to maintain fire safety equipments in healthy and working condition and for this purpose, the appellant are being paid an amount of Rs. 1,63,000/- per month. In the terms of contract, it is the responsibility that appellant to make statutory monthly payment like PF, ECI etc. for his employees and the receipt of the same need to be forwarded to the unit entering into the contract for fire safety with the appellant. From the work order mentioned, there is no contract for providing man power and the same is for specific purpose for fire fighting and to handle any emergent situation as well as for maintenance and keeping the fire fighting equipments in good condition. The activity undertaken by the appellant does not fall under the category of Manpower Recruitment or Supply Agency Service. The impugned order-in-appeal is not sustainable - appeal allowed.

Issues Involved:
1. Classification of services provided by the appellant.
2. Applicability of service tax under the category of Manpower Recruitment or Supply Agency Service.
3. Compliance with statutory obligations.
4. Validity of the adjudicating authority's order.
5. Reliance on previous judicial decisions.
6. Revenue neutrality argument.

Detailed Analysis:

1. Classification of Services Provided by the Appellant:
The appellant is engaged in assisting fire safety services and maintaining fire and safety equipment. The department contended that these services fall under Manpower Recruitment or Supply Agency Service, alleging non-payment of service tax amounting to Rs. 34,03,091/- for the period October 2006 to March 2011. The appellant argued that their services are specific to fire safety and maintenance, paid on a lump-sum basis, and do not constitute manpower supply.

2. Applicability of Service Tax under Manpower Recruitment or Supply Agency Service:
The appellant emphasized that the personnel deployed remained under their control and supervision, not the client's. The contract was for specific fire safety services, not for manpower supply. The Tribunal examined the definition under Section 65(68) of the Finance Act, 1994, and concluded that the appellant's activities do not fall under Manpower Recruitment or Supply Agency Service, as there was no contract for providing manpower but for specific fire safety services.

3. Compliance with Statutory Obligations:
The appellant complied with statutory obligations like Provident Fund and ECI for their employees. The Tribunal noted that the appellant was responsible for statutory payments for their employees, indicating that the employees were under the appellant's control, not the client's.

4. Validity of the Adjudicating Authority's Order:
The adjudicating authority confirmed the charges in the show cause notice, which was upheld by the Commissioner (Appeals). The Tribunal, however, found that the activities undertaken by the appellant do not fall under the category of Manpower Recruitment or Supply Agency Service, thereby setting aside the impugned order-in-appeal.

5. Reliance on Previous Judicial Decisions:
The appellant cited several judicial decisions supporting their argument, including:
- Pranav Oxigen vs. CCE, Vadodara-II
- Sureel Enterprise Pvt. Limited vs. CCE & ST, Ahmedabad
- Seven Hills Construction vs. Commissioner of Service Tax, Nagpur
- Commissioner vs. Seven Hills Construction
- C.C.C. EX. & ST., Aurangabad vs. Shri Smarth Sevabhavi Trust
- Super Poly Fabriks Limited vs. Commissioner of C. Ex. Punjab
- Naya Sarai SSS Limited vs. CCE, Ranchi

These cases established that contracts for specific jobs do not constitute manpower supply. The Tribunal relied on these precedents to conclude that the appellant's services were not taxable under the disputed category.

6. Revenue Neutrality Argument:
The appellant argued that even if service tax was payable, it would be available as CENVAT credit to the service recipient, resulting in no loss to the government exchequer. The Tribunal acknowledged this argument but decided the issue on merit, finding the demand unsustainable.

Conclusion:
The Tribunal set aside the impugned order-in-appeal, concluding that the appellant's activities do not fall under Manpower Recruitment or Supply Agency Service. The appeal was allowed, and the demand for service tax was dismissed.

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