2020 (1) TMI 586 - AT - Service Tax

Imposition of penalty - wrongful classification of service - failure to pay service tax - allegation that the service provided by the appellant is covered under Manpower Recruitment and Supply Agency Services and not cleaning services - HELD THAT - It is a well settled principle that contract executed between the parties would determine the nature of work and there is no whisper of supply of manpower in the said contract dated 27-7-2005 and 1-6-2006. It was agreed that appellant was to provide service of maintenance, gardening, housekeeping and those specified in Annexure-A. A cursory reading of the entire contract would reveal that Annexure-A provided the detail nature of work to be carried out and its gist remain confined to cleaning work of various types in the educational Institute of D.Y. Patil Pratishthan which are also listed in Annexure-A. Primarily the issue is not concerning bundle of services provided by the appellant which is also found absent in the show cause notice but the same is concerned with provision for manpower engagement to provide cleaning service or else supply of manpower service - Going by the work contract, it is apparently clear that appellant was providing cleaning service through manpower engaged under its control and supervision and not supplied manpower to the service receiver to undertake cleaning service under the control and supervision of the service receiver. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Confirmation of duty demand of Service Tax on the appellant for providing services under "Manpower Recruitment and Supply Agency Services" instead of "cleaning services" as claimed.

Analysis:
1. Background and Procedural History: The appellant was providing services to educational institutions and was alleged to be engaged in providing taxable services from 16-6-2005. The duty demand, interest, and penalties were confirmed through adjudication. The matter was remanded by CESTAT for re-adjudication to ensure compliance with natural justice principles after the appellant's unsuccessful attempt before the Commissioner (Appeals).

2. Appellant's Argument: The appellant contended that based on the agreement and terms, they were providing cleaning services through manpower under their control and supervision, not manpower recruitment or supply services. They cited judicial decisions to support their argument that the services provided were not taxable as they were rendered to an educational institution, which is not a commercial or industrial establishment.

3. Respondent's Argument: The Authorized Representative for the respondent department argued that the contract clearly indicated that the activities were manpower supply services, including maintenance, gardening, and housekeeping. They emphasized that the Commissioner (Appeals) had correctly determined the nature of work undertaken by the appellant as manpower supply services based on the agreement terms.

4. Tribunal's Decision: The Tribunal analyzed the contract and observed that the nature of work specified in Annexure-A was primarily cleaning services at the educational institution. The Tribunal noted that the appellant provided cleaning services through manpower under their control and supervision, not supplying manpower to the service receiver. They highlighted discrepancies in the appellant's ledger book but noted that no invoice was inspected or verified during the adjudication process. Relying on previous Tribunal decisions, the Tribunal allowed the appeal and set aside the order confirming duty demand.

5. Conclusion: The Tribunal concluded that the appellant was providing cleaning services through controlled manpower, not supplying manpower services. The decision was based on the contract terms and the absence of evidence supporting the duty demand. The appeal was allowed, and the order confirming duty demand was set aside.