2018 (4) TMI 834 - AT - Service Tax

Manpower recruitment or supply agency service - Department took the view that labours were supplied by the appellant, who were under the control of the Dairy authorities and the activities performed by those workers were under the direction and control of the Dairy authorities - Held that - The scope of work described in the said work order relates to washing of cans/ crate s and packing of milk. Since there is no specific mention about deployment of labour / work force, the services provided by the appellant should not fall under the taxable category of manpower recruitment or supply agency service - Since there is no specific mention about payment of reimbursement of wages and salaries to the workman, the services provided should not fall under such taxable category of service - appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of taxable service under manpower recruitment or supply agency service category based on activities undertaken by the appellant.

Analysis:
The appeal was filed against an order passed by the Commissioner (Appeals), Customs and Central Excise, Jaipur, regarding the activities undertaken by the appellant under an agreement with Ajmer District Milk Production Co-operative Limited, Ajmer. The Department considered the activities, including washing of cars/crates, sorting of milk bags, and milk packing, to be a taxable service falling under the category of manpower recruitment or supply agency service. The Department's conclusion was based on the belief that the labors provided by the appellant were under the control of the Dairy authorities, and their activities were directed and controlled by the Dairy authorities. Consequently, a Service Tax demand of &8377; 13,06,908/- was confirmed, along with interest and penalties under Sections 77 and 78 of the Finance Act, 1994.

Upon hearing both sides and examining the records, the Tribunal reviewed the work order issued by Ajmer District Milk Production Co-operative Limited to the appellant. The scope of work mentioned in the work order primarily focused on washing of cans/crates and packing of milk. Notably, there was no specific mention of labor/workforce deployment in the work order. Additionally, the rate contract specified in the work order indicated fixed payment on a per liter for per pack basis, without any provision for reimbursement of wages and salaries to the workers.

Based on the absence of explicit terms regarding labor deployment and payment of wages in the work order, the Tribunal concluded that the services provided by the appellant did not fall under the taxable category of manpower recruitment or supply agency service. Therefore, the Tribunal found no merit in the impugned order and proceeded to set it aside, allowing the appeal in favor of the appellant and granting consequential relief.

The judgment was delivered by the Tribunal, setting aside the impugned order and ruling in favor of the appellant based on the interpretation of the activities undertaken and the absence of specific terms related to labor supply and payment in the work order issued by Ajmer District Milk Production Co-operative Limited.