2018 (4) TMI 1097 - AT - Service Tax

Man-power Recruitment and Supply Agency Service - impugned order held that the activity is execution of specific job or payments are made with reference to job and accordingly, there is no tax liability for supply of man-power - Held that - there is no arrangement for pure supply of labour. This is substantially true in respect of at least some of the work, where the nature of work is identified and the payment is linked to per metric tonne - Supervision work is paid on lump sum basis. There is no reference to number of labourers or duration of their work. Appeal dismissed - decided against Revenue.

Summary

Issues: Service tax liability under "Man-power Recruitment and Supply Agency Service"

Analysis:
The appeals by Revenue concern the service tax liability of the respondents under "Man-power Recruitment and Supply Agency Service" based on an audit of M/s. Kilburn Chemicals Ltd. The Revenue alleged that the company availed taxable services from the respondents, leading to proceedings to demand and recover service tax. The original authority confirmed the service tax liabilities with penalties. However, on appeal, the Commissioner (Appeals) ruled that the activities are not liable to service tax as "Man-power Supply," emphasizing that the payments were based on specific job execution rather than labor supply. The impugned order highlighted the nature of payments, such as 'metric tonnes basis,' 'per man day,' or 'lump sum amount,' rejecting the department's argument that it constituted "Man-power Supply."

The assessee-respondents filed a cross objection against the Revenue's appeal, contending that all their grounds were not discussed by the Commissioner (Appeals) but would support the final finding. The case revolved around entries in the accounts of M/s. Kilburn Chemicals Ltd., with the nature of work and payment details derived from those accounts. The impugned order and the appeal grounds mainly focused on the nature of payment, either for labor supply or executing a specific job. The dispute lacked clarity on who had control over the deployed workers, crucial in determining if it was man-power supply or job-related work. The recipient's control over the laborers during the job would indicate the nature of the service provided. The impugned order concluded that there was no arrangement for pure supply of labor based on available details, especially for work linked to specific metrics like production per metric tonne or lump sum payments for supervision work. The appeals failed to provide additional factual details to challenge the impugned order's findings, resulting in the dismissal of the Revenue's appeals.