2021 (12) TMI 4 - AT - Service Tax

Nature of activity - manufacture or service - job of manufacturing Plastic Jars and Containers in the factory of the service recipient by the help of their own manpower - such activity falls under supply of Manpower and Recruitment Service or Job work manufacturing? - HELD THAT - There is no dispute in the fact that the appellants have entered into the contract for undertaking the manufacturing of Plastic Jars and containers in the factory of the Service recipient. The charges for the job is on per container basis, the appellants are not collecting the fixed wages or salary against providing the manpower. Therefore, the activity carried out by the appellant is of Job Work manufacturing and not of Manpower Recruitment Service. On the same set of facts in respect of other contractors providing services to the same service recipient, this tribunal has considered the matter in the case of RAMESHCHANDRA C. PATEL VERSUS COMMR. OF SERVICE TAX, AHMEDABAD 2011 (11) TMI 415 - CESTAT, AHMEDABAD where it was held that the contractor has provided the same service to the service recipient i.e. M/s N K Proteins Ltd and this tribunal held that it does not fall under Manpower Recruitment service. Thus, in the present case, the services cannot be classified under the head of manpower recruitment service - appeal allowed - decided in favor of appellant.

Summary

Issues:
Determining whether the activity of manufacturing Plastic Jars and Containers in the factory of the service recipient by the appellants falls under supply of Manpower and Recruitment Service or Job work manufacturing.

Analysis:
The appellant argued that they were engaged in manufacturing excisable goods on a job worker basis and not providing Manpower Recruitment Service. They highlighted that all obligations regarding manpower were on them and the service recipient had no involvement in manpower-related payments. The appellant relied on various judgments to support their position.

The Revenue, represented by the Learned Superintendent, reiterated the findings of the impugned order, supporting the classification of the activity as Manpower Recruitment Service.

Upon careful consideration of both sides' submissions and the records, the Tribunal observed that the appellants had a contract for manufacturing Plastic Jars and containers in the service recipient's factory on a per container basis without collecting fixed wages or salaries for providing manpower. The Tribunal concluded that the activity was Job Work manufacturing and not Manpower Recruitment Service. Reference was made to a previous judgment involving a similar contractor providing services to the same service recipient, where the Tribunal ruled that the activity did not constitute Manpower Recruitment service.

The Tribunal analyzed the definition of manpower recruitment or supply service under the Finance Act, emphasizing the requirements for a service to be classified as such. It was noted that the agreement between the parties and the appellant's activity of contract manufacturing did not involve any aspect of manpower supply or recruitment. The Tribunal found that the department failed to demonstrate how the service provided could be categorized under manpower recruitment or supply.

Based on the above analysis and supported by the cited judgments, the Tribunal concluded that the services in question could not be classified under manpower recruitment service. Consequently, the impugned orders were set aside, and the appeals were allowed.