2024 (9) TMI 929 - AT - Service Tax

Liability of appellant Shri Bhavik Hitesh Shah to discharge the service tax under the category of Man Power Recruitment and Supply Agency Service for undertaking the work of loading, unloading, sorting, breaking, cutting and casting of brass scrap into billets for M/s Rajhans Metals Private Limited. - HELD THAT - From the nature of work in the contract and the payment terms against such work and other conditions clearly show that Shri Bhavik Hiteshbhai Shah has not provided the Man Power Recruitment and Supply Agency Service whereas he has undertaken the job of various activities up till the scrap converted into billets, therefore, the activity is amounting to manufacture in terms of Section 2(f) of Central Excise Act, 1944. Merely, because for carrying out the said job work the manpower is deputed that itself does not mean that the appellant have provided the Man Power Recruitment and Supply Agency Service . The appellant have also raised the bill of per KG of material processed by the appellant. From the bill raised by the appellant, it is clear that the rate was charged on the basis of the total weight of the material processed by the appellant. Therefore, the charges are not towards the wages of labour engaged for carrying out the job work. In this fact it is clear that the appellant have not provided any service of Man Power Recruitment and Supply Agency Service. This issue is no longer res-integra as it is directly covered by the various judgments cited by the learned counsel. The demand under Man Power Recruitment and Supply Agency Service is not sustainable - Hence, the impugned order is set aside - Appeals are allowed.

Summary

Issues:
Determining liability for service tax under 'Man Power Recruitment and Supply Agency Service' for job work activities involving loading, unloading, sorting, breaking, cutting, and casting of brass scrap into billets.

Analysis:
The appellant, represented by Shri Amber Kumrawat, argued that the job work activities undertaken by Shri Bhavik Hitesh Shah for Rajhans Metals Private Limited do not qualify as 'Man Power Recruitment and Supply Agency Service.' The appellant's submission highlighted that the job work was based on a per Kg basis of net casted billet, indicating a manufacturing activity rather than a service. Reference was made to specific judgments supporting this argument.

On the contrary, Shri Anand Kumar, appearing for the Revenue, reiterated the findings of the impugned order, emphasizing the classification of the service based on the labor work contract. The contract outlined the terms and conditions, including the supply of raw materials, labor cost per kg of net casted billet, and the responsibilities of the labor contractor regarding recruitment, benefits, and tax deductions.

Upon careful consideration of both sides' submissions and reviewing the labor work contract, the Tribunal analyzed the nature of work, payment terms, and conditions outlined in the contract. The Tribunal concluded that the activities performed by Shri Bhavik Hiteshbhai Shah did not constitute 'Man Power Recruitment and Supply Agency Service' but amounted to manufacturing under the Central Excise Act, 1944. The billing structure based on the total weight of processed material further supported the view that the charges were not for labor wages, leading to the decision that the service tax demand was not sustainable.

Citing the judgments referred to by the appellant's counsel, the Tribunal set aside the impugned order, allowing the appeals. The decision was pronounced in open court on 11.09.2024, emphasizing the clear distinction between job work activities and 'Man Power Recruitment and Supply Agency Service' in this particular case.