2009 (12) TMI 155 - AT - Service Tax

Manpower recruitment agency- The appellants herein had entered into a contract with M/s. Aspin Wall & Co. for the purpose of rendering services of loading, standardization, unloading, stacking, weighing etc. On conclusion of the investigation and scrutiny of the documents and after recording the statements of various persons, the lower authorities felt that the services rendered by the appellant would fall under manpower recruitment and supply agency and having not discharged the service tax liability, appellant is liable to pay service tax for the period from June, 2005 to September, 2006. Coming to such a conclusion, show-cause notice was issued to the appellant. Commissioner (Appeals) upheld the classification of the services rendered by the appellant under the category of manpower recruitment and supply services and upheld the confirmed demand, interest with penalties. Held that- there is no agreement for utilization of services of an individual but a job/lump sum work given to the appellants for execution. The said clarification issued by the Board would be appropriate in the case where services of manpower recruitment & supply agency, had been temporarily taken by the Business or the industrial association for supplying of manpower and may not be for execution of a specific work. Thus, we are of the view that the impugned order is liable to be set aside and we do so. The appeal is allowed with consequential relief if any.

Issues Involved:
1. Classification of services rendered by the appellant.
2. Applicability of service tax under the category of 'manpower recruitment and supply services'.
3. Validity of the show-cause notice based on limitation.
4. Reliance on Board Circulars and judicial precedents.
5. Interpretation of the contract as a works contract versus supply of manpower.

Detailed Analysis:

Issue 1: Classification of Services Rendered by the Appellant
The appellant entered into a contract with M/s. Aspin Wall & Co. for services including loading, standardization, unloading, stacking, and weighing. The lower authorities classified these services under 'manpower recruitment and supply agency'. The appellant contended that the contract was for executing specific tasks and not for supplying manpower.

Issue 2: Applicability of Service Tax under 'Manpower Recruitment and Supply Services'
The lower authorities concluded that the appellant was liable for service tax from June 2005 to September 2006. The appellant argued that the contract was a works contract, not for manpower supply. The Commissioner (Appeals) upheld the classification under 'manpower recruitment and supply services' and confirmed the demand for service tax, interest, and penalties.

Issue 3: Validity of the Show-Cause Notice Based on Limitation
The appellant argued that the show-cause notice was hit by limitation. They had registered under other service categories, and the department was aware of their activities. The tribunal did not specifically address this issue as it disposed of the appeal on merits.

Issue 4: Reliance on Board Circulars and Judicial Precedents
The Commissioner (Appeals) relied on Circular No. B 1/6/2005-TRU, dated 27-7-2005, which clarified the scope of 'manpower recruitment and supply services'. The appellant argued that this circular was out of context and that the essence of the contract was the execution of work, not manpower supply. They cited various judicial precedents to support their argument.

Issue 5: Interpretation of the Contract as a Works Contract versus Supply of Manpower
The tribunal examined the contract and found that it was for executing specific tasks like loading, unloading, and stacking, and not for supplying manpower. The Supreme Court judgments in Super Poly Fabriks Ltd., Kone Elevators (India) Ltd., and Mahindra & Mahindra Ltd. were cited to support the view that the essence of the contract should determine its nature. The tribunal concluded that the contract was for lump sum work and did not fall under 'manpower recruitment and supply services'.

Conclusion:
The tribunal set aside the impugned order, concluding that the services rendered by the appellant were not classifiable under 'manpower recruitment and supply services'. The appeal was allowed with consequential relief, and no findings were recorded on other submissions.

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