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TMI Blog2022 (5) TMI 909X X X X Extracts X X X X X X X X Extracts X X X X ..... s prior to June 2012, the Tribunal had set aside the demand relying upon the decision in the case of BHAGYASHREE ENTERPRISES, SONAWANE INDUSTRIAL VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE-I [ 2017 (3) TMI 786 - CESTAT MUMBAI] . There is change of law with effect from 01.07.2012. It is submitted by the Ld. Counsel for appellants that appellants have obtained registration with the department and has started paying service tax. In similar matters for the period after June 2012, the Tribunal in K. BALAKRISHNAN AND N. RADHAKRISHNAN VERSUS COMMISSIONER OF GST CENTRAL EXCISE, MADURAI [ 2021 (9) TMI 181 - CESTAT CHENNAI] has remanded the matter to the adjudicating authority for re-computation of the service tax after granting cum tax benefit. Penalty - HELD THAT:- The issue being purely interpretational and the appellants having taken registration after 2012, the penalty imposed is unwarranted - In the remand proceedings, the adjudicating authority shall look into as to whether the demand of service tax is legal and proper and also the correctness of the quantification. The appeals for the period prior to June 2012 are allowed - for the period after June 2012, the matter is remanded to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 S.Subburayulu ST/40628/2018 O-in-A No.274/2017 dt.28.12.2017 2,16,328/- 04/12 to 03/13 3. Ld. Counsel Shri N. Viswanathan appeared and argued for the appellants. He submitted that the appellants had undertaken the activity in the nature of assembling etc. in the manufacture of tractors for M/s.TAFE. They had entered into contracts with TAFE on principal-to-principal basis using their own employees. The control and supervision of these employees was with them. Further, payment made by TAFE was on piece rate basis i.e. per tractor assembled/processed/manufactured. For these reasons, the activity does not fall within the definition of "Man Power Recruitment and Supply Agency Service". He referred to the definition which reads as under : "9. Definitions relating to 'Manpower Recruitment or Supply Agency' Service : (i) Statutory definition as amended with effect from 16.05.2008 is : "manpower recruitment or supply agency" means any person engaged in providing any service, directly or indirectly, in any manner for recruitment or supply of manpower, temporarily or otherwise, to any other person" (ii) Taxable Service : As per Section 65 (105)(I) of the Finance Act, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rests with the service recipient. The value of service has a direct correlation to manpower deployed, i.e., manpower deployed multiplied by the rate. In other words, manpower supplier will charge for supply of manpower even if manpower remains idle. 2.1 On the other hand, the essential characteristics of job work service are that service provider is assigned a job e.g. fabrication/stitching, labeling etc. of garments in case of apparel. Service provider is accountable for the job he undertakes. It is for the service provider to decide how he deploys and uses his manpower. Service recipient is concerned only as regard the job work. In other words service receiver is not concerned about the manpower. The value of service is function of quantum of job work undertaken, i.e. number of pieces fabricated etc. It is immaterial as to whether the job worker undertakes job work in his premises or in the premises of service receiver." 7. Ld. Counsel also relied upon the decision of the Hon'ble Supreme Court in Commissioner Vs Surya Trading & Services - 2018 (15) GSTL J209 (SC) and also the following decisions : (a) Shiv Narayanan Bansal Vs CCE [2013 (31) STR 747] (b) SS Trust Vs CCE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in executing the works. Appellant executes the works along with other workers and merely because he has engaged other workers in executing the work, it cannot be said that he is the supplier of man power. In clause 11 of the agreement, it is stated that the company will have privity of contract with the contractor only and will give instructions only to the appellant/contractor and has nothing to do with the conditions of employment of the workers who work with appellant. Reliance placed by the department in clause 14, in our view, is misconceived. It can be seen that while the workers are engaged to work within the manufacturing activity premises they have to abide by certain labour legislations. Merely taking such licence or abiding by such labour law, it cannot be said that the contract for executing works within the manufacturing activity would be supply of man power. The argument of Ld.A.R is that original authority has observed that the agreement is tailor-made for specific purpose, however we find that no evidence has been brought forth by the department to prove that the agreement per se was not followed in its letter and spirit or for that matter, there is no evidence tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod after 2012 is remanded to the adjudicating authority who shall determine afresh the duty demand for the period after 1.7.2012 and examine whether service tax on these services has been discharged. The cum-tax benefit contention shall also be looked into. With regard to the penalty imposed after the period 2012, we are of the opinion that being an interpretational issue the appellant cannot be saddled with the guilt of intention to evade tax. Further, there is no allegation or finding of any positive act on the part of the appellant of willful suppression to evade service tax. On such score, imposition of penalty is unwarranted and requires to be set aside which we hereby do. 9. The demand, interest and penalties for the period prior to 1.7.2012 is set aside. For the period after 1.7.2012 the matter is remanded to the adjudicating authority who shall redetermine the duty as directed above. The penalties for the period after 1.7.2012 is also set aside. The impugned orders are modified in above terms. The appeals are partly allowed and partly remanded." 12. However, it has to be stated that in the present case the appellants besides contesting the correctness of the quantificat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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