2013 (12) TMI 961 - AT - Service Tax

Demand of service tax - Manpower Recruitment or Supply Agency Services - Held that - appellants are engaged in the activity of crushing of stones and supply the same to their customers as per agreement entered between them on rate contract basis. In the earlier period a similar issue came before the Tribunal in the case of Divya Enterprises v. CCE, Bangalore as reported in 2009 (12) TMI 155 - CESTAT, BANGALORE wherein the appellant was executing the work of loading, unloading, bagging, stacking etc. on contract basis. In that case also the department was of the view that the appellant was liable to pay service tax under the category of Manpower Supply Services wherein the Tribunal has held that lump-sum work are given to the appellant for execution and this lump-sum work would not fall under the category of providing of service of supply of manpower. Therefore, following the precedent decision in the case of Divya Enterprises, we hold that the activity undertaken by the appellants does not cover by the manpower supply services - Decided in favour of assessee.

Summary

Issues:
Service Tax demand confirmation under Manpower Recruitment or Supply Agency Services.

Analysis:
The appellants appealed against an order confirming a Service Tax demand of Rs. 1,68,54,852 under the category of Manpower Recruitment or Supply Agency Services. The Tribunal found that the appeal could be disposed of at that stage. After waiving the pre-deposit requirement of Service Tax, interest, and penalties, the Tribunal proceeded with the disposal of the appeal.

The case involved the appellants providing manpower for running and maintaining a crusher plant and loading crushed stones as per a rate contract with their clients. The department contended that this activity fell under Manpower Supply Services, leading to the confirmation of the demands after issuing a show-cause notice to the appellants.

Upon reviewing the case records, the Tribunal observed that the appellants were primarily engaged in crushing stones and supplying them to customers based on rate contracts. Referring to a previous Tribunal decision in the case of Divya Enterprises v. CCE, Bangalore, where a similar issue arose, it was established that lump-sum work given to the appellants for execution did not constitute providing manpower supply services. Following the precedent set in the Divya Enterprises case, the Tribunal concluded that the appellants' activities did not fall under the category of manpower supply services. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.

This judgment highlights the importance of analyzing the nature of services provided to determine the applicability of specific tax categories, emphasizing the need to consider precedents in similar cases for consistent decision-making.