Deputing of own employees for specified job works cannot be held as Manpower Supply Services: CESTAT [Read Order]

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The New Delhi bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that deputing of own employees for specified job works cannot be held as Manpower Supply Services.

Donypolo Udyog Ltd, the appellant is a manufacturer registered under Central Excise for manufacturing railway sleepers falling under chapter heading 68109990 of the Schedule to the Central Excise Tariff Act, 1985. The appellant is also registered with service tax under the category of Goods Transport Agency. 

The appellant was of the view that the services provided by them were not of manpower supply, but of job work and they have paid service tax on 75% value for the month of September 2013 on the job charge service received from three small service providers availing exemption under notification No. 33/2012 – ST dated 20.6.2012.

The jurisdictional officer issued the show cause notice dated 14.3.2014 seeking to demand a service tax amount of Rs. 8,39,660/– along with interest and impose a penalty under sections 76 and 77 of the Finance Act, 1994 which was confirmed by the Adjudicating authority.  The said order was upheld by the Commissioner (Appeals).

As per clause 1A(u) of the aforesaid notification, the supply of manpower for any purpose by the individual/proprietary firm, Hindu Undivided Family or partnership firm whether registered or not to a business entity registered as a body corporate is liable to pay service tax.

A bench comprising of Mr Justice Dilip Gupta, President and Ms Hemambika R Priya, Member (Technical) observed that the agreement indicates that the service received is that of job work. Further, the invoices raised by the service provider to the appellant along with the statement of the job work done by them also show that the appellant was receiving job work service from this service provider viz., Ms/ Balaji Udyog.

In several decisions rendered in  Shivshakti Enterprises Vs CCE, Pune  (supra) and  Shailu Traders Vs CCE, Indore  (supra) it was held that where the service provider had deployed his employees in the manufacturing premises of the appellant for specified job works, the same cannot be held as Manpower Supply Services.

Considering various judicial pronouncements, the Tribunal set aside the impugned order and allowed the appeal of the assessee. Shri Ankur Upadhyay, Advocate appeared for the Appellant and Shri Rajeev Kapoor appeared for the Department.

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