2017 (5) TMI 56 - AT - Service Tax

Classification of service - execution of work related to fabrication, machining and assembly etc - classified under the head Manpower Recruitment or Supply Agency Service or are job-work - Held that - During the relevant time, the position was not clear as there was conflicting decisions. Moreover, in the instant case, when question of interpretation is involved, certainly penalty is not leviable - appeal dismissed - decided against Revenue.

Summary

Issues:
Whether services provided by the assessee-Respondents to M/s Simplex Engineering & Foundry Works Pvt. Ltd. are covered under the taxable category of "Manpower Recruitment or Supply Agency Service"?

Analysis:
The Department filed appeals against the order-in-appeal passed by the Commissioner of Central Excise & Customs (Appeals-I), Raipur, alleging that the assessee-Respondents provided "Manpower Recruitment or Supply Agency Service" to M/s Simplex Engineering & Foundry Works Pvt. Ltd. The original authority considered it as "Job Work" and dropped the demand. The Commissioner (Appeals) held that the services provided were indeed "Manpower Recruitment or Supply Agency Service" and imposed Service Tax along with interest, refraining from levying penalties due to the interpretational nature of the issue. The Department, aggrieved by this decision, filed the present appeals.

The Tribunal dismissed appeals against two other parties due to the tax effect being below the prescribed limit as per national litigation policy, while the remaining three appeals were considered. Despite the absence of the assessee-Respondents, the Tribunal heard the Department's representative and reviewed the records.

The crux of the issue revolved around the interpretation of whether the services provided fell under "Manpower Recruitment or Supply Agency Service." The relevant sections of the Finance Act, 1994 were discussed, emphasizing the definitions and amendments related to this taxable service. The Tribunal noted the conflicting views on the nature of the contract between the assessee-Respondents and M/s Simplex Engineering & Foundry Works Pvt. Ltd. The Commissioner (Appeals) considered it as "Manpower Recruitment or Supply Agency Service" while the original authority viewed it as "Job Work." Given the interpretational ambiguity and conflicting decisions during the relevant period, the Tribunal concurred with the Commissioner (Appeals) that penalties were not applicable in this scenario.

Ultimately, the Tribunal upheld the impugned order passed by the Commissioner (Appeals), sustaining the levy of Service Tax and interest without imposing penalties. The appeals filed by the Department were dismissed, and the decision was pronounced in open court on 03.03.2017.