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2024 (12) TMI 277 - AT - Service TaxClassification of services - Manpower Recruitment or Supply Agency Services or not - appellant had carried out the activities namely packing/filling of milk pouches, loading/unloading of crates and ancillary activities to Mehsana District Co-Operative Milk Producers Union Ltd. on rate contract basis during the period from 2010-11 to 2014-15 - HELD THAT - It is necessary to refer to the contract between the appellant and their client. On perusal of such contract, it is found that firstly the contract is not for supply of manpower but for undertaking particular jobs involving filling and packing of milk pouches, loading and unloading of crates and ancillary and the rate for the such job is also on the per piece basis. Therefore, the client is not concerned about the number of manpower or manhours involved in the job under taken on their behalf. Therefore, with this undisputed fact, the activities cannot be classified as Manpower Recruitment or Supply Agency Services . In case of SS. ASSOCIATES VERSUS COMMISSIONER OF CENTRAL EXCISE, BANGALORE 2009 (12) TMI 152 - CESTAT, BANGALORE wherein Hon'ble CESTAT held that ' No agreement for utilization of services of an individual- Lump-sum work not covered under Manpower Recruitment or Supply Agency service.' In view of the above judgment, it is categorically held that any job under taken by the contractor and the rate for the same is as per the quantum of the job and not on the basis of number of manpower or manhours. In the present case also, the appellants have not taken the service charge as against the wages/ salary of the manpower deputed to the appellant. Therefore, the service is not covered under the Manpower Recruitment or Supply Agency Services up till 30.06.2012, therefore, no service tax is payable. As regard the period with effect from 01.07.2012, there was a negative list regime and the definition of individual service was done away so all the activities are taxable, except falling under negative list or under exemption Notification No. 25/2012-ST, if any applicable in the present case. In this regard, we find that the activity under taken by the appellant is clearly manufacturing activity, in terms of Central Excise Act, 1944 for the reason the product milk pouches is falling under Chapter Heading 04.02 of Central Excise Tarif Act, 1985 - their activity amount to manufacture in terms of Section 2(f) of Central Excise Act, 1944. The process in the present case is clearly amount to manufacture and leviable to central excise duty under the Central Excise Act, 1944. Therefore, the activity in the present case being amount to manufacture under Central Excise Act, 1944, the same is exempted under Sr. No. 30(i) read with Clause (ya) of para 2 of the Notification. Therefore, for the period from 01.07.2012 also no service tax is payable on the appellant s activity. The impugned order is set aside - Appeal is allowed.
Issues:
Classification of service provided by the appellant under "Manpower Recruitment or Supply Agency Services" for the period up to 30.06.2012 and post 01.07.2012. Analysis: The case involved the appellant providing services such as packing/filling of milk pouches, loading/unloading of crates, and ancillary activities to a client on a rate contract basis. The department alleged that the services fell under "Manpower Recruitment or Supply Agency Services" and issued a show cause notice demanding Service Tax, interest, and penalty. The appellant contended that their activities amounted to manufacturing under the Central Excise Act, 1944, and therefore were not liable for service tax. The contract with the client was specifically for particular jobs on a per-piece basis, not for the supply of manpower, as evidenced by various judgments cited by the appellant's counsel. The Tribunal examined the contract between the appellant and the client and found that the nature of the work was specific to tasks like filling and packing of milk pouches, loading/unloading of crates, and ancillary activities, with the rate being based on the quantum of work, not on the number of manpower or manhours involved. Citing precedents like M/s. S.S. Associates and M/s. Divya Enterprises, the Tribunal concluded that the appellant's services did not fall under "Manpower Recruitment or Supply Agency Services" up to 30.06.2012, and hence no service tax was payable for that period. Regarding the period from 01.07.2012, the Tribunal noted the shift to a negative list regime where all activities were taxable unless exempted. The appellant's activities were deemed as manufacturing under the Central Excise Act, 1944, specifically related to packing of milk pouches, which rendered the product marketable. The Tribunal relied on exemption Notification No. 25/2012-ST and concluded that the appellant's activities were exempted under Sr. No. 30(i) as they amounted to a process of manufacture. Therefore, no service tax was payable by the appellant for the period post 01.07.2012 as well. In light of the above analysis, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant.
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