2013 (2) TMI 587 - AT - Service Tax

Manpower Recruitment and Supply Services - demand for the services for the period 01/04/2005 to 26/04/2008 - appellant submits that the Sanstha is a charitable Trust and is only a facilitator for the transaction between the farmers on one side and the sugar factory on the other - Held that - From the agreements entered into between the farmers and the transporters with the sugar factory, it is seen that, it is the farmer who is responsible and accountable to the sugar factory for harvesting and supply of sugarcane. Similarly, it is the transporter who is accountable to the sugar factory for the transportation of sugarcane from the farmers fields to the recipient sugar factory. Thus the services are directly rendered by the farmers and the transporters to the sugar factory. For these services rendered, the payments are made by the sugar factory on the basis of tonnage of sugarcane received and the amounts are routed through the appellant-Trust for crediting to the bank accounts of the farmers and the transporters. As per clause (68) of section 65 of the Finance Act, 1994 Manpower Recruitment and Supply Agency means the person has to provide the service with regard to supply of manpower but as in the instant case, when the farmers and the transporters have entered into agreements directly with the sugar factory, by no stretch of imagination the appellant-Trust could be considered as a person responsible for supply of manpower to the sugar factory temporarily or otherwise. Further, from the bills raised for the services rendered, it is seen that the amounts are based on quantity of the sugarcane supplied to the sugar factory on the basis of rates agreed upon between the farmer and the sugar factory, and, the transporter and the sugar factory. The appellant-Trust only acts as a facilitator. The payments for the services rendered, though received by the Trust by way of cheques are directly deposited into the accounts of the farmers and transporters and the appellant-Trust does not get any consideration nor do they have any bank account for receiving any money. Thus the appellant has made out a strong case in his favour for grant of interim stay.

Summary

Issues:
Interpretation of service tax liability for services provided by a Trust acting as a facilitator between farmers, transporters, and a sugar factory.

Analysis:
The appeal and stay application were filed against an Order-in-Original passed by the Commissioner of Central Excise, Kolhapur, regarding service tax demand on a Trust acting as a facilitator for services between farmers, transporters, and a sugar factory. The Trust, consisting of farmers and transporters, facilitated the transportation of sugarcane from farmers' fields to the sugar factory. The department alleged the Trust's activities fell under 'Manpower Recruitment and Supply Services,' demanding a significant service tax amount. The Trust argued it was merely a facilitator with no direct agreement with the sugar factory, and payments were routed to farmers and transporters without any retention. The Tribunal noted the direct agreements between farmers/transporters and the sugar factory, concluding the Trust did not supply manpower and acted solely as a facilitator. The Tribunal granted an unconditional waiver from pre-deposit of the dues and stayed the recovery during the appeal, recognizing the Trust's strong case.

In summary, the Tribunal analyzed the service tax liability of a Trust facilitating services between farmers, transporters, and a sugar factory. By examining the agreements and payment mechanisms, the Tribunal determined the Trust did not supply manpower but acted as a facilitator, leading to the grant of a waiver from pre-deposit and a stay on recovery during the appeal process.