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TMI Blog2022 (12) TMI 468X X X X Extracts X X X X X X X X Extracts X X X X ..... ly the service tax demand was confirmed. Being aggrieved, the appellant filed the present appeals. 2. Shri K.J. Kinariwala, learned Consultant appearing on behalf of the appellant M/s. Talala Taluka Sahakari Khand Udyog Mandali Limited, submits that there is no arrangement for supply of manpower for harvesting and transportation whereas the contract was for harvesting and transportation of sugarcane and the charges for such activities is per ton basis. The farmers are not concerned with number of manpower, man-days, or man-hours for making payment and the charges are made per-ton of sugarcane basis. Therefore, there is no supply of man power. He placed reliance of the following judgments:- (a) 2014 (36) STR 123 (Tri. Mumbai) - Satara Sahakari Shetu Audyogik Oos Todani Vahtook Society vs. CCE, Kolhapur. (b) 2016 (41) STR 806 (Bom) - CC, C.Ex & ST, Aurangabad vs. Shri Samarth Sevabhavi Trust. (c) 2013 (31) STR 611 (Tri. Mumbai) - Seven Hills Construction vs. CST, Nagpur. (d) 2010 (18) STR 17 (Tri. Bang.) - Ritesh Enterprises vs. CCE, Bangalore. He further submits that in the appellant's own case, for the subsequent period, the learned Commissioner (Appeals) has dropped the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he State Govt. and the Karkhana will pay the charges (worked out on the basis of the said rates) to the Sanstha on fortnightly basis. 4. The commission/incentive payable to the contractors will be handed over by Karkhana to the Sanstha which further has to be paid by Sanstha. 5. Karkhana will not be responsible for the injury if any, caused to any cane cutting labourer while doing the cane cutting. 6. For arranging the cane cutting and transportation, the Karkhana will pay the consideration to the Sanstha as and when demanded by the Sanstha. 7. The Sanstha also will carry out the jobs of handling of sugar, feeding of sugarcane in the sugar mill, cleaning of parking yard of vehicles transporting sugarcane, loading/unloading/handling of pressmud, baling of bagasse, handling of loose bagasse, collecting/removing/disposal of boiler ash, supply of wood for burning into the boiler, handling/stacking of compost, disposal of spentwash by spraying on the pressmud, stitching of sugar bags. The rates for the said job will be decided by the Karkhana and Sanstha. 8. The karkhana will retain 15% amount of every bill raised for cane cutting transportation job as well as other jobs as se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the agreement is for the specific tasks of "harvesting of sugarcane and transportation of the same from the farmers' fields to the sugar factory". The agreement is not for supply of any manpower to the sugar factory. The consideration paid also has no nexus to the manpower employed. 5.3 As per Section 65(68) of Finance Act, 1994 ' "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' and the taxable service is defined under Section 65(105)(k) as "service rendered to any person by a manpower recruitment or supply agency in relation to the recruitment or supply of manpower, temporarily or otherwise, in any manner". The appellants are not manpower recruitment agencies as they do not recruit any persons; they also do not supply manpower to the sugar factory. What they have undertaken is harvesting of sugarcane and transportation of the same to the sugar factory. To undertake this work, they have engaged labour/transport contractors who have undertaken the work of harvesting of sugarcane and transportation of the same. In a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er or vendor, public relation services, management or supervision. Sub-clause (iv) deals with procurement of goods or services, which are inputs for the client. Sugarcane is an input for the client, the sugar factory, and sugarcane is 'goods'. Though the appellants do not procure these goods, they are rendering a service incidental or ancillary to such procurement and therefore, the activity undertaken by the appellants in harvesting and transporting the goods comes under sub-clause (vii) of Section 65(19). Since the impugned demands have been raised under the category of manpower supply or recruitment agency services, such demands have no legal basis. 5.5 In respect of the appeals filed by the Revenue, the lower appellate authority, after examining the contracts entered into by the respondents, came to the conclusion that the activity undertaken did not amount to "supply of manpower" but came under the category of "business auxiliary service". The ld. lower appellate authority noted that this Tribunal in the case of Ritesh Enterprises v. Commissioner (supra), in the context of contracts of execution of work for loading, unloading, bag stacking and destacking held as under :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xable service" means any service provided or to be provided to any person, by a manpower recruitment or supply agency in relation to the recruitment or supply of manpower, temporarily or otherwise, in any manner" "65(68) "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." 6. In view of provisions of Section 65(68) the "Manpower Recruitment or Supply Agency Services" means any person providing any service, directly or indirectly, in any manner for recruitment or supply of manpower, temporarily or otherwise, to any other person, and Section 65(105)(k) defines the taxable services for providing such services. From the above definitions, it is rather clear that it envisages supply of labour which can be classified as "Manpower Recruitment or Supply Agency Services". In the case in hand, there is no supply of labour to the sugar factory concerned. The respondents have undertaken the activities of harvesting of sugarcane and transporting the same to the sugar factory for which labour is employed. 7. Having regard to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factory. What they have undertaken is harvesting of sugarcane and transportation of the same to the sugar factory. To undertake that work, they have entered into an agreement with the contractors who have provided the manpower for harvesting of the sugarcane and transportation of the same. In any service activity, manpower is required. That does not make the service as supply of manpower. Otherwise, all services would have to be classified as "manpower supply service". Further in the instant case, the consideration is paid not on the supply of manpower but on the sugarcane supplied on tonnage basis. If an efficient contractor engages less manpower, he will make more profits while an inefficient contractor engaging more manpower would make less profits. In other words, since the consideration is received on the quantity of sugarcane delivered, the essential nature of service is the harvesting and supply of sugarcane. How the service is rendered is not relevant for classification of the service. From the statutory definitions given above and the contracts entered into by the appellants, it is clear that there is no element of manpower supply or recruitment by the appellants to the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lants have made any payments towards these demands, refund of the same shall be considered by the department in accordance with the law." (d) CCE, Kolhapur vs. Shriram SAO TVS Limited. "3. The issue involved in this case is regarding the service tax liability of the respondent under the category of "Manpower Recruitment and Supply Agency Service". The lower authorities came to a conclusion that the respondent who is registered under co-operative society; service tax liability gets confirmed for undertaking the activities of cutting/harvesting and transporting of sugarcane to Sugar factory as the assessee is functioning on behalf of the farmers enters into a contract with labour contractors for arranging manpower for the purpose of harvesting/cutting and transporting of sugarcane to sugar factories. Coming to such a conclusion, show cause notices were issued to the respondent and the adjudicating authority confirmed the demands on the respondent. Aggrieved of the such order an appeal was preferred before the first appellate authority. The first appellate authority after following the due process of law came to a conclusion that the services rendered by the appellant would not f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat a document has to be read as a whole. The purport and object with which the parties thereto entered into a contract ought to be ascertained only from the terms and conditions thereof. Neither the nomenclature of the document nor any particular activity undertaken by the parties to the contract would be decisive." 7. In any case, the agreement itself is eloquent enough to draw the above conclusion. In this background, we must look at the show cause notice dated 16-10-2008. On that date, whether the Revenue was in a position to levy tax on services provided by the respondent? The answer has to be in negative. Having regard to the history of service tax in our country, it becomes clear that when the State was in the process of including various types of services in service tax net, the State's policy was to include different services at different point of time. For the first time in 1997, the State included Recruitment Service as taxable service. Slowly, labour contract services were also made taxable in the year 2005. The package deal which is involved in this case was not subjected to service tax in the year 2005 and so, the Revenue was really not able to demand service tax to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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