2019 (9) TMI 222 - AT - Service Tax

Demand of service tax - manpower supply services - different approach of the revenue against the different assessees who provides similar services - contention of the appellant is that the appellant has never supplied any Manpower whereas by virtue of the respective agreements, they only carried on the assigned work on job work basis for which, the materials were supplied by the appellant and they are not amenable to service tax - HELD THAT - One of the sample Bills reproduced by the Ld. First Appellate Authority is not the only activity performed by the workers engaged by the said contractor and nor does the relevant agreement say that the agreement/contract entered into with the particular contractor, or any other contractor for that matter, was only for processing and cleaning because I find that all the agreements are similarly worded. The First Appellate Authority holds in respect of two contractors that the agreements/contracts in question were for job work and deletes the tax demand which was raised by holding that the agreements were not for supply of Manpower Services, but retains the tag of Manpower as against job work in respect of the agreement with M/s. Sri Kavery Agency. Undisputedly, the Revenue is not in appeal in respect of the other part of the Order of the First Appellate Authority and therefore, on the very principles of consistency, when there is no change of facts, the impugned order of the First Appellate Authority cannot be sustained since different yardsticks cannot be adopted for identically situated assessees especially when neither Show Cause Notice nor Order-in-Original even whispers about any such dissimilarities. There is also no reasoning to accept the contentions of the Revenue that the agreements/contracts entered with the above three contractors are different because, the Show Cause Notice does not allege any such differences and nor is there any finding to this effect by the Adjudicating Authority in the Order-in-Original. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of agreements for job work basis.
2. Classification of services for Service Tax.
3. Consistency in tax demand decisions.

Analysis:

Issue 1: Interpretation of agreements for job work basis
The appellant contested that they did not supply Manpower but carried out assigned work on a job work basis with materials provided by them, hence not liable for Service Tax. The Ld. First Appellate Authority upheld the demand for one contractor without clear reasoning, while similar agreements with other contractors were treated differently. The Adjudicating Authority's findings highlighted that the agreements mandated the service providers to carry out assigned work using their own staff, making it a job work arrangement. The agreements were analyzed, emphasizing the role of contractors in providing auxiliary support and undertaking specific tasks.

Issue 2: Classification of services for Service Tax
The Ld. AR supported the lower authorities' findings that the appellant provided Manpower services based on the agreements and invoices. However, the Tribunal noted inconsistencies in the treatment of different contractors, where some were considered for job work while others were labeled as Manpower supply. The Tribunal referred to Circular No. 190/9/2015-Service Tax to support its interpretation of the specific agreement with one contractor for job work purposes, aligning with the circular's guidelines.

Issue 3: Consistency in tax demand decisions
The Tribunal emphasized the importance of consistency in tax demand decisions, pointing out that different treatment for identical situations is unjustifiable. It noted that the Revenue did not appeal the decisions regarding other contractors, hence the impugned order singling out one contractor for Manpower supply was deemed inconsistent and unsustainable. Lack of reasoning for distinguishing agreements and absence of dissimilarities highlighted the need for uniformity in tax assessments.

In conclusion, the Tribunal set aside the demand and the impugned order, allowing the appeal with consequential benefits as per the law. The judgment emphasized the need for consistent application of tax laws and highlighted the importance of interpreting agreements accurately to determine the tax liability for services rendered.