2023 (3) TMI 539 - AT - Service Tax

Classification of services - manufacturing railway sleeper falling under chapter heading 68109990 of the Schedule to the Central Excise Tariff Act 1985 - reverse charge mechanism - whether the service received by the appellant is Manpower Supply Service or job work service? - HELD THAT - As per the clause 1A(u) of N/N. 30/2012 ST dated 20.6.2012 supply of manpower for any purpose by the individual/proprietary firm Hindu Undivided Family or partnership firm whether registered or not to a business entity registered as body corporate is liable to pay service tax. In this regard the Commissioner (Appeals) has relied on the GAR-7 challans of M/s Balaji Udyog one of the five service providers who has classified their service under Manpower Recruitment Agency. Therefore the Commissioner (Appeals) has concluded that the service received by the appellant are to be covered under reverse charge mechanism and service tax is payable on 75% of the value of service. A plain reading of Agreement between the appellant and service provider M/s Balaji Udyog Ltd. clearly indicates that the service received is that of job work. Perusal of the invoices raised by the service provider to the appellant along with the statement of the job work done by them also shows that the appellant was receiving job work service from this service provider viz. Ms/ Balaji Udyog. It is not material to rely on the definition of the service indicated by the service provider in the GAR 7 challans when the agreement between the appellant and the service provider is crystal clear. The issue is no longer res integra as Tribunal in several decisions rendered in SHIVSHAKTI ENTERPRISES VERSUS COMMISSIONER OF CENTRAL EXCISE PUNE 2015 (12) TMI 682 - CESTAT MUMBAI and M/S. SHAILU TRADERS VERSUS C.C.E. INDORE 2018 (3) TMI 1282 - CESTAT NEW DELHI has held that where the service provider had deployed his employees in the manufacturing premises of the appellant for specified job works the same cannot be held as Manpower Supply Services. Appeal allowed - decided in favour of appellant.

Summary

Issues:
The issues involved in the judgment are whether the service received by the appellant is Manpower Supply Service or job work service.

Details of the Judgment:

Issue 1: Classification of Service Received
The appellant, a manufacturer registered under Central Excise, was under scrutiny for payment of service tax under reverse charge on services received. The Commissioner (Appeals) upheld the demand for service tax, penalties, and interest. The appellant contended that the service received was for job work, not manpower supply. The Tribunal analyzed the nature of the service and the relevant notification. The agreement between the appellant and the service provider, M/s Balaji Udyog Ltd, clearly indicated job work services. The Tribunal referred to previous judgments to support the conclusion that deploying employees for specific job works does not constitute Manpower Supply Services. Therefore, the Tribunal set aside the impugned order, ruling in favor of the appellant.

Issue 2: Interpretation of Notification
The Tribunal examined the notification specifying service tax liabilities under reverse charge. The Commissioner (Appeals) relied on GAR-7 challans of the service provider classifying their service as Manpower Recruitment Agency. However, the Tribunal emphasized the importance of the agreement between the parties in determining the nature of the service. The Tribunal found that the service provider was engaged in job work as per the agreement and invoices, not manpower supply. Citing precedents, the Tribunal concluded that the service received by the appellant did not fall under Manpower Supply Services, leading to the setting aside of the impugned order.

Separate Judgment by Judges:
The judgment was delivered by Hon'ble Ms. Hemambika R. Priya, Member (Technical), and Hon'ble Mr. Justice Dilip Gupta, President. The appeal filed by M/S Donypolo Udyog Limited was allowed, overturning the order of the Commissioner (Appeals) dated 10.01.2017. The Tribunal determined that the service received by the appellant was job work, not Manpower Supply Service, based on the agreement and invoices between the parties. The Tribunal referred to previous decisions to support its findings and set aside the demand for service tax, penalties, and interest.

Conclusion:
The Tribunal, after considering the arguments of the counsel and the Authorized Representative, concluded that the service received by the appellant was job work, not Manpower Supply Service. Relying on the agreement and invoices, the Tribunal set aside the order of the Commissioner (Appeals) and allowed the appeal filed by the appellant. The judgment was pronounced on 13.03.2023.