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TMI Blog2015 (3) TMI 43X X X X Extracts X X X X X X X X Extracts X X X X ..... by a manpower recruitment or supply agency in relation to the recruitment or supply of manpower, temporarily or otherwise, in any manner'. Service brought under the tax net under the'Manpower Recruitment or Supply Agency Service' envisages supply of labour per se. In the instant case, we notice that there is no supply of labour per se to the sugar factory. The work undertaken is harvesting of sugar cane and transporting the same to the sugar factory for which labour is employed. The sugar cane belongs to the sugar factory in terms of the agreement of sale executed between the farmer and the sugar factory. Therefore, the activity undertaken by the appellant is one of procuring or processing of the goods belonging to the client which is c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugar cane and transporting the harvested sugar cane from the farmers' fields to the factory site is classifiable as'manpower recruitment or supply agency service' and is chargeable to service tax. Accordingly, a show cause notice dated 13/5/2008 was issued to the appellant demanding service tax amounting to ₹ 93,65,050/- under the provisions of Section 73 of the Finance Act, 1994 along with interest thereon under Section 75 ibid. The notice also proposed to impose penalties under Sections 77 and 78 of the said Finance Act. The notice was adjudicated vide the impugned order and the demands were confirmed along with interest thereon. An equivalent amount of penalty was also imposed under Section 78 apart from a penalty of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /tractors, etc., the sugar factory pays freight and service tax thereon, whereas for harvesting of sugar cane, the appellant pays to the contractor harvesting charges which they get reimbursed from the sugar factory at actual. The activity undertaken by the appellant is harvesting of sugar cane and transporting the same on behalf of the farmers. Thus, the said activity does not come under the category of'manpower recruitment or supply agency service' as defined in Section 65(105)(k) of the Finance Act, 1994 read with Section 65(68). The charges for the harvesting and transportation are paid on tonnage basis and not on the number of labour employed. The sugar cane being a standing crop is covered under the sale of goods Act, 1930 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TB/C-I dated 02.04.2013, wherein under similar circumstances the co-ordinate bench of this Tribunal (of which, I was also a member) have held in favour of assessee that there is no element of'Manpower Recruitment or Supply Agency Service'. In view of the above, it is pleaded that the demand of service tax under the category of'manpower recruitment or supply agency service' is not sustainable. 3.6. The learned counsel has also submitted copies of bills raised by them on the sugar factory from which it is evidence that the charges have been made on per ton basis of the sugar cane delivered and the sugar factory has also paid them service charges on tonnage basis of sugar cane delivered and not on any other parameters. From ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by both the sides. We have also perused the agreements entered into between various parties which are available on record. 5.1. From the agreement entered into between the farmer and the sugar factory, the farmer has undertaken to supply sugar cane grown by him in his field to the sugar factory. The agreement also says that the farmer will cut the sugar cane by his own labour and will deliver it at the gate of the sugar factory through his own transport means Arrangement for hiring and transportation will be made by the farmer. The labour required for this work of cutting and transportation will be of the farmer and the responsibility of paying wages to them would also be of the farmer. As per the agreement entered into between the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) sugar cane transportation by various modes such as bullock-carts, trucks/tractor, labourers (head loads). From these agreements what is evident is that there is no supply of any labour by the appellant to the sugar factory. They are only facilitators between the farmers and the sugar factory. Their work is to ensure that the sugar cane ripe for harvesting are cut and transported to the sugar factory. The labour for the same is provided either by the sugar factory itself or by the labour contractors. The charges involved in sugar cane harvesting is collected by the appellant and distributed to the labour contractors/labourers. The charges for transportation of sugar cane are directly paid by the sugar factory to the transporters wherever ..... X X X X Extracts X X X X X X X X Extracts X X X X
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