2018 (2) TMI 318 - AT - Service Tax

Business Auxiliary Services - whether the the impugned activity carried out by the assessee was not BAS but only manufacture? - Held that - there is no fault with the conclusion of the lower appellate authority that activity undertaken by the assessee amounts to manufacture u/s 2(f) of the CEA, 1994 - demand rightly set aside. Supply of manpower to job-worker - liability of service tax - Held that - while allegation has been raised that assessee is supplying man power, however there is no clarity given therein with regard to terms of supply - the assessee has been utilizing his own labour for packing activities. Viewed in this light, we are not able to appreciate how tax can be levied on the assessee for utilizing his own labour - tax liability do not sustain. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Tax liability of ?13,41,757/- for Business Auxiliary Service (BAS) from 10.09.2004 to 28.08.2006.
2. Tax liability of ?10,254/- for Man Power Recruitment Agency Service from 16.06.2005 to 28.02.2006.

Analysis:

Issue 1: Tax liability for BAS
The Commissioner (Appeals) set aside the demand of service tax, interest, and penalty for BAS. The department appealed this decision. The lower appellate authority concluded that the activity undertaken by the assessee amounts to "manufacture" under Section 2(f) of the Central Excise Act, 1994. The Tribunal found no fault with this conclusion, stating that the demand set aside by the lower authority is sustainable. Therefore, the department's appeal against the decision was dismissed.

Issue 2: Tax liability for Man Power Recruitment Agency Service
The Commissioner (Appeals) upheld the demand for Man Power Recruitment Agency Service. The assessee appealed this decision. The Tribunal noted that the assessee employed its own labor for packing goods received from the principal manufacturer. There was a lack of clarity in the show-cause notice regarding the terms of supply of manpower. The Tribunal found that tax cannot be levied on the assessee for utilizing its own labor. Consequently, the tax liability and penalty imposed on the assessee were set aside. The assessee's appeal was successful.

In conclusion, the department's appeal was dismissed, and the assessee's appeal was allowed. Any consequential relief was granted as per law. The cross objection filed by the assessee was also disposed of.

This detailed analysis covers the issues of tax liability for BAS and Man Power Recruitment Agency Service as addressed in the judgment by the Appellate Tribunal CESTAT CHENNAI.