Activity of Service providing only for a particular Job cannot be Classified under Man Power Recruitment or Supply Service: CESTAT [Read Order]

The Ahmedabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that activity of service providing only for a particular job cannot be classified under Man Power Recruitment Or Supply Service.

Naresh k Solnaki, the appellant are engaged in series of activities for their service recipient M/s Intricast Private Limited like breaking the upper cover of shell of castings by pneumatic hammer, and also drilling for removal of upper cover and separating each of the pieces in the welding and reduction of size of scrap pieces, if necessary. These series of activities were to be conducted in the knock out division of M/s Intricast Private Limited and the lump sum of Rs. 2.11 per KG of the castings was paid by M/s Intricast Private Limited to the appellant.

The department in the show cause notice stated that the appellant had provided ‘Manpower Recruitment or Supply Agency Service’ to M/s Intricast Private Limited hence, the service tax is leviable on the amount paid to the appellant for these services. The adjudicating authority dropped the proceedings of the show cause notice on the ground that the appellant had executed lump sum work/ job and execution of such lump sum work/ job work not covered under ‘Man Power Recruitment or Supply Agency Service’.

The Revenue filed appeal before the Commissioner (Appeals) who allowed the Revenue’s Appeal and held that the appellant is liable to pay service tax under ‘Man Power Recruitment or Supply Agency Service’. 

Shri S. Bissa, counsel appearing on behalf of the appellant submited that Commissioner (Appeals) has committed an error in confirming the service tax liability on the appellant under the category of ‘Man Power Recruitment or Supply Agency Service’ because the appellant has received payment on the quantum of the work performed i.e. quantities of castings on which the wax repairing or assembly work was done, and not on man-hour or man-day basis and therefore, such activities were not in the nature of ‘Man Power Recruitment or Supply Agency Service’. Shri R.K. Agarwal, Superintendent appearing on behalf of the Revenue reiterated the findings of the impugned order.

A two member bench comprising of Mr. Ramesh Nair, Member (Judicial) and Mr. Raju, Member (Technical) observed that there is no dispute that the appellant have provided particular job of wax repairing and assembly department work for M/s Intricast Private Limited.

In the case of Divya Enterprises v. CCE, Bangalore wherein the appellant was executing the work of loading, unloading, bagging, stacking etc. on contract basis. In that case also the department was of the view that the appellant was liable to pay service tax under the category of Manpower Supply Services wherein the Tribunal has held that lump- sum work are given to the appellant for execution and this lump-sum work would not fall under the category of providing of service of supply of manpower.

The CESTAT held that the demand in the present case is not sustainable and set aside the impugned order is set aside.

To Read the full text of the Order CLICK HERE

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