The Customs, Excise & Service Tax Appellate Tribunal ruled that the appellant’s activity of fabrication is not classified as manpower recruitment or supply agency service.
Fact
The issue involved in the case is whether the appellant’s activity of carrying out a job of fabrication for their service recipient with the help of the labour of the appellant is classifiable under Manpower Recruitment or Supply Agency Service or otherwise.
Submissions
Dhaval K Shah, Counsel appearing on behalf of the appellant submitted that the appellant has not provided the manpower, they have undertaken the job of fabrication of various types and they have charged to their customers as per KGs or per piece basis. Therefore, the activity of the appellant does not fall under the category of Manpower Recruitment or Supply Agency Service.
Decision
The division bench of Ramesh Nair, Member (Judicial) and C.L. Maharm, Member (Technical) found that the revenue has classified the service of the appellant under Manpower Recruitment or Supply Agency Service and demanded the service tax only on the ground that in some of the invoices the appellant has mentioned the labour charges.
The bench observed that the appellant had not provided the manpower to the service recipient. It is not a case that the service recipient has control or supervision over the manpower for getting their job done as per their direction. It is clear that the appellant had been assigned the job of fabrication by the service recipient and the appellant had charged on the quantum of job basis and not on the basis of number of manpower or man hours.
The Tribunal said that irrespective of number of manpower or man hours involved in the job to be carried out, the appellant is under obligation to complete a job of fabrication as assigned to him, therefore, in this arrangement it cannot be said that the appellant have provided the service of Manpower Recruitment or Supply Agency Service.
It was further observed that the service of the appellant does not fall under the category of Manpower Recruitment or Supply Agency Service however, the same is classifiable under ‘Business Auxiliary service’ under the sub category of ‘production or processing on behalf of the client. Since demand was not raised under ‘Business Auxiliary service’ hence, the demand will not sustain for this reason alone.
The bench held that impugned order is not sustainable.
Case title: Hitech Industries v/s C.S.T.-Service Tax
Citation: Service Tax Appeal No. 12743 of 2014 – DB
