CESTAT quashes Service Tax Demand on ‘Manpower Recruitment and Supply Services' provided on Piece-Rate Basis [Read Order]

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed the service tax demand on ‘Manpower Recruitment and Supply Services' provided on piece-rate basis.

The appellant, Mahendra Pal and Co has claimed that the services provided by them do not qualify as ‘Manpower Supply Service’ as it was a contract for job work on per piece basis. It has been argued that the appellants were providing services to M/s Mars Forge Private Limited. The appellants had raised the bill towards labour charges for the activity of inspection, loading and dispatch, production, cutting, short blasting, security guards, gardening etc.

It was argued that the manpower hired by the contractor was working under the control of contractor and was not under the control of service recipient. The payment received by the appellant was based on the work performed and was not related to number of people employed for the said work.

The Authorized Representative relied on the impugned order and argued that all the jobs undertaken by the appellant are in the nature of manpower supply. The Counsel further argued that even if the jobs are done at per piece basis, still the nature of service is ‘Man Power Supply Service’ and therefore, the appellants are liable for service tax under the category of ‘Manpower Recruitment and Supply Service’.

A perusal of the bills and the contract submitted by the appellant does not make it clear how the bills have been raised. The bills as well as contract are in Gujarati language. The contract does not contain any per piece rate chart.

In the judgment of CC vs Shri Samarth Sevabhavi Trust, it was held that supply of labour which can be classified as "Manpower Recruitment or Supply Agency Services".

The Tribunal of Raju, Technical Member and Somesh Arora, Judicial Member observed that “However if it is seen that the bills are raised on the number of persons supplied then the demand may be confirmed under the head of ‘Manpower Recruitment and Supply Services’. The appeals are allowed by way of remand to the original adjudicating authority.”

To Read the full text of the Order CLICK HERE

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