Job Fabrication service does not fall under the category of Manpower Recruitment or Supply Agency Service: CESTAT sets aside Demand of Service Tax [Read Order]

The Ahmedabad bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that Job Fabrication service does not fall under the category of Manpower Recruitment or Supply Agency Service and set aside the demand of Service tax.

Hitech Industries, the appellant challenged the order and questioned whether the appellant’s activity of carrying out the 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.

Shri 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 piece basis. Therefore, the activity of the appellant does not fall under the category of Manpower Recruitment or Supply Agency Service.

Shri Ajay Kumar Samota, Superintendent (AR) appearing on behalf of the Revenue reiterated the finding of the impugned order.

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.

From the invoices and the letter given by the service recipient, it was evident 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 was charged on the quantum of job basis and not based on several manpower or man hours.

A two-member bench comprising Mr Ramesh Nair, Member (Judicial) and Mr C L Mahar, Member (Technical) observed that since the demand was not raised under ‘Business Auxiliary service’, the demand will not sustain for this reason alone. The appellant submitted that their service recipient is paying excise duty on their final product for this reason the appellant’s activity is otherwise exempted under Notification No. 08/ 2005-ST.

In light of the judgement, the CESTAT set aside the Impugned order and allowed the appeal.

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