The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed service tax demand as the agreement between service provider and recipient not for supply of man power.
The department entertained a view that the activity undertaken by the appellant falls under the category of Manpower Recruitment or Supply Agency Service and since no service tax has been discharged by the appellant, a show cause notice dated 14.10.2013 demanding service tax of Rs. 5,30,579/- under Section 73(1) of Finance Act, 1994 was issued to the appellant. The interest and penal provisions etc were also invoked in the impugned show cause notice.
The matter reached up to the level of Commissioner (Appeals) where the Commissioner (Appeals) vide impugned order did not provide any relief to the appellant and therefore, they are before the Tribunal against the above mentioned order-in-appeal.
The advocate appearing for the appellant has contended that the activity undertaken by the appellant does not fall under the service category of Manpower Recruitment or Supply Agency Service as the work provided by them was in the nature of job work and the manpower provided by the appellant has always remained under the control of appellant. The activities such as melting process of castings etc. were part of the manufacturing process undertaken by M/s. Intricast Pvt. Limited and for the work undertaken by the appellant a lump-sum payment of Rs. 3.70 per kg. of the casting was paid by the manufacturer M/s. Intricast Pvt. Limited.
A Two-Member Bench comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member relied on the judgment in Dhanashree Enterprise vs CCE Pune-I, wherein it was observed that “We find from the show cause notice that though the department has proposed the service of the appellant as classifiable under Manpower Recruitment or Supply Agency service but no evidence was adduced to conclusively hold that the service is of Manpower Recruitment or Supply Agency service. The figure of the service tax was retrieved from the bank account which does not show what is the basis of the service charge by the appellant to the service recipient. Therefore, we do not find any material evidence in the show-cause notice to hold that the appellant are providing Manpower Recruitment or Supply Agency service.”
The Tribunal found that the impugned order-in-appeal is without any merit and therefore, the ervice tax demand was set-aside.
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