2019 (6) TMI 214 - AT - Service Tax

Classification off services - Manpower Recruitment and Supply Agency Services or otherwise? - non-payment of Service Tax liability from 16/06/2005 i.e. the date on which the services became taxable to 28/02/2007 - penalty - HELD THAT - Though the work assigned by the recipient of service is of handling of various goods in their factory premises. However, as per the rate chart, it is seen that though the rates are per metric tonne, but it is also on the basis of per person employed for such work. It can be seen that there is a heading loading guarantee and stacking guarantee which is on the basis of 4 mt, per person per gang, 6 mt per person per gang and 6.85 mt per person per gang respectively. This clearly shows that the payment is towards the supply of manpower for the various jobs as described in the above agreement. Moreover, the service recipient is making a separate payment towards the provident fund of the workers deputed by the service provider. It is evident from the debit note. From the debit note, it can be seen that the service recipient are obliged to pay a separate amount of provident fund to the appellant. If the contention of the appellant is considered, that the rate is as per tonne basis, but in such case, the recipient should not be responsible for any other payment except the actual rate given in the contract. However, from the above debit note, the appellant is receiving a separate amount towards the provident fund of the employees deputed by the appellant. In such a case, it is a clear case of supplies of manpower. Penalty u/s 76 and 78 of FA - HELD THAT - Once the penalty under section 78 is imposed, no separate penalty under section 76 should be imposed - the penalty imposed under section 76 is set aside. Remaining portion of the order is upheld. Appeal allowed in part.

Summary

Issues:
1. Whether the appellant's services fall under the category of Manpower Recruitment or Supply Agency Services for the purpose of Service Tax liability.
2. Whether the demand of Service Tax under Manpower Recruitment service is correct based on the nature of services provided by the appellant.
3. Whether the penalty imposed under sections 76 and 78 is justified.

Analysis:
1. The appellant obtained registration under Manpower Recruitment or Supply Agency Services and started paying taxes from a certain date. However, the Service Tax liability was not discharged for a specific period, leading to a Show Cause Notice and subsequent demand of Service Tax. The appellant contested the demand, arguing that the services provided, such as stacking, loading, and handling, do not fall under the category of Manpower Recruitment agency services. The appellant's counsel cited various judgments to support this argument.

2. The Revenue, represented by the Assistant Commissioner, maintained that the services provided by the appellant do constitute Manpower Recruitment agency services based on the agreement clauses and rate list. The consideration for services was argued to be based on both quantity and the number of persons involved, including separate payment for provident fund by the service recipient. The Tribunal analyzed the contract and noted that the rates were based on both quantity and per person employed, indicating a supply of manpower. The separate payment for provident fund further supported this conclusion. The Tribunal distinguished the cited judgments as they did not align with the specific conditions of the present case, ultimately upholding the tax liability under Manpower Recruitment Agency and Supply Services.

3. Regarding the penalties imposed under sections 76 and 78, the Tribunal referred to a High Court decision stating that if a penalty under section 78 is imposed, a separate penalty under section 76 should not be applied. Consequently, the penalty under section 76 was set aside, while the rest of the order confirming the tax liability was upheld. The Tribunal partially allowed the appeal by modifying the impugned order accordingly.