A Division Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Ahmedabad Bench observed that the payment for manufacturing activities undertaken on job work basis is not Manpower Recruitment or Supply Agency Service.
The case of the department is that the contract between the appellant and their client is for supply of labour therefore, the activity of the appellant, Dosti Fabricators, falls under the category of Manpower Recruitment or Supply Agency Service hence, the same is taxable.
The Counsel for the appellant, Vikash Mehta, submitted that the contract it is clear that appellant have undertaken job of fabrication of tugs and barges and there is no supply of labour to their client therefore, activity does not fall under the category of “Manpower Recruitment or Supply Agency Service”.
In this regard the counsel referred to the relevant clauses of the contract whereby he submits that the contract is not for supply of manpower but specifically for fabrication of barges and tugs which does not fall under Manpower Recruitment or Supply Agency Service and that the activity of the appellant is of manufacturing which is evident from the undisputed fact that with effect from 01.03.2011, Central Excise duty was levied on the manufacture of tugs and barges.
Rajesh Nathan, the Authorized Representative for the Revenue reiterated the findings in the impugned order.
In SA Engineering Works vs. CCE&ST, it was held that over and above paying the amount for manufacturing activities undertaken by the appellant on jobwork basis, the said service receiver had not paid any specific price to the workmen/ Labour deployed by the appellant. Thus, under such circumstances, it cannot be said that the appellant had provided the Manpower Recruitment and Supply Agency Service.
A Two-Member Bench comprising Ramesh Nair, Judicial Member and CK Mahar, Technical Member observed that “it can be seen that even though manpower was deployed by the service provider but the job is for specific activity such as manufacture, processing etc. and charges is paid on the basis of job and not on the basis of manpower, the activity was held not to be classifiable under Manpower Recruitment or Supply Agency Service. The ratio of the above judgments is directly applicable in the facts of the present case.”
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