2018 (8) TMI 245 - AT - Service Tax

Man Power Recruitment and Supply Agency Service - appellant was engaged in rendering Man Power Supply Service for cutting, packing, stitching, loading and unloading major textile articles - Held that - The appellant has been supplying temporary labour to various companies such as M/s Relogistic India Pvt. Ltd. The consideration accounted in the balance sheet is towards supply of said temporary man power - Since the supply of temporary man power is covered by the definition of Manpower Recruitment of Supply Agency, the appellant is liable to discharge the Service Tax under the category. Cold storage facility for agricultural produce - Held that - The appellant is not engaged in the activity of storage of agricultural produce - the benefit as storage of agricultural produce cannot be provided. A part of the demand has also been made against amounts which were reimbursed to the appellant towards expenses incurred. The demand of service Tax on such reimbursible expenses cannot be sustained. Penalties will be chargeable proportionately. Appeal allowed in part.

Summary

Issues:
1. Liability to pay Service Tax on Man Power Supply Service
2. Justification for Service Tax demand on reimbursable expenses

Analysis:
1. The appeal was filed against the Order-in-Appeal directing the payment of Service Tax on the supply of man power. The appellant supplied temporary labor for various activities, and the department concluded that Service Tax was applicable under 'Man Power Recruitment and Supply Agency Service'. The appellant argued that the payments received were for activities like storage and handling of agricultural produce, not man power supply. The advocate cited a Supreme Court case to support the argument against taxing reimbursable expenses. The department justified the tax demand based on the appellant's admission of supplying labor. The Tribunal found that the appellant did supply temporary labor, falling under the definition of taxable service for manpower recruitment or supply agency. The Tribunal upheld the Service Tax demand for man power supply based on the evidence presented.

2. The Tribunal examined the definitions of 'manpower recruitment or supply agency' and 'taxable service' under the Finance Act, 1994. Despite the appellant's claim of providing cold storage services, the Tribunal found no evidence to support this. The Tribunal noted that previous cases set aside Service Tax demands when manpower supply was part of lump sum work contracts, which was not the case here. The Tribunal ruled in favor of the Service Tax demand for man power supply but set aside the demand on reimbursable expenses. Citing a Supreme Court decision, the Tribunal found the demand on reimbursable expenses not sustainable. The appeal was partly allowed, with penalties to be charged proportionately.