2018 (9) TMI 1369 - AT - Service Tax

Manpower recruitment services - bills raised for fabrication charges in respect of shoe/garments - Revenue entertained a view that the appellant was not having any infrastructure for fabrication, the Bills were essentially for manpower supply - Held that - Inasmuch as the impugned order of Commissioner(Appeals) is based upon the precedent decisions of the Tribunal as also on the analysis of the contract entered between assessee and the service recipient in terms of which the payments have to be made on the fabrication of per piece and the clarifications issued by the Board, there is no justifiable reasons to interfere in the impugned order of Commissioner(Appeals) - appeal dismissed - decided against Revenue.

Summary

Issues:
Interpretation of 'manpower recruitment services' for Service Tax liability.

Analysis:
The case involved a dispute regarding the classification of services provided by the appellant as 'manpower recruitment services' for Service Tax purposes. The Revenue contended that the appellant supplied manpower to a company for fabrication charges, which should attract Service Tax. The appellant, however, argued that they were engaged in fabrication work on a piece-rate basis, not merely providing manpower. The Revenue initiated proceedings against the appellant, demanding Service Tax and imposing penalties. The appellant, in response, filed a refund claim, which was rejected by the adjudicating authority citing pending proceedings. The Commissioner(Appeals) analyzed the agreement between the parties and previous Tribunal decisions to determine that the appellant's services did not fall under 'manpower supply services.' The Commissioner(Appeals) allowed the refund claim, leading to the Revenue's appeal.

The appellate authority extensively reviewed the terms of the agreement and the actual activities undertaken by the service provider to ascertain the nature of services provided. Relying on precedents like Ramesh Chandra C.Patel v. CST-Ahmedabad and Damodara Reddy v. CCE, Tirupathi, the authority concluded that compensation based on work done by laborers does not constitute 'manpower supply service.' Additionally, a clarification from the tax research unit of C.B.E.C. supported the view that payment for job-work done, not the number of employees supplied, does not classify as 'manpower supply service.' The appellate authority found no grounds to interfere with the Commissioner(Appeals)'s decision, as it was based on Tribunal precedents, contract analysis, and official clarifications. Consequently, the Revenue's appeal was dismissed, upholding the decision in favor of the appellant.