Service Tax Liability on Strapping of Wire Rod Coil arises Separately for  Service Provided by Head Office and Branch Office: CESTAT quashes Tax Demand

In a recent case, the Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) service tax liability on strapping of wire rod coil arises separately for service provided by Head Office and Branch Office and upheld the demand quashed by Commissioner (Appeals).

 The Department challenged the impugned order dated 18/03/2010 passed by Commissioner, wherein he has dropped the proceedings initiated in the show cause notice dated 23.03.2010. It was stated that the Adjudicating authority failed to verify whether the unit of M/s. Walzen Strips Private Limited, the Respondent located at Visakhapatnam and Kolkata are one or the same different.

Further contended that the Adjudicating authority failed to verify whether the services rendered by the Respondent in their Visakhapatnam unit were like the services said to be rendered by them at Kolkata.

The Respondent stated that their Head office is located in Kolkata and they have their branch office located at Visakhapatnam to perform their work at the site. Further stated that their branch office undertakes the work of strapping wire rod coils at Visakhapatnam. They undertake the contract job of strapping of Wire Rod coils of Visakhapatnam Steel Plant (VSP) which involves two activities supply of materials and employment of labour.

Materials required for the job are manufactured by us in West Bengal and are sent to VSP premises after payment of Excise duty. The strapping job is executed by us on behalf of VSP employing our labour as a labour contractor under licence from the Licensing Officer and Commissioner of Labour, Visakhapatnam.

 It was argued that the activity of the Company is not covered u/s 65(68) of the Finance Act, 1994 i.e. Manpower Recruitment Agency either. The DGST Mumbai has clarified vide Question and Answers (2000-2001) No.7.5 that Labour Contractors, who supply their labour on contract, would not be covered under the definition of Manpower Recruitment Agency.

It was submitted that the works at Rashtriya Ispat Nigam, Visakhapatnam have been undertaken by their branch office at Visakhapatnam and contended that the service tax in respect to the services rendered by their Visakhapatnam branch office has been dealt with separately at Visakhapatnam. Hence the demand made at the Kolkata Head office is not sustainable. The Adjudicating Authority, commissioner (Appeals) made the same observations and  dropped the proceedings

 Since no further action is warranted in their Head Office at Kolkata, the two-member bench comprising Shri P K Choudhary,(Judicial) and Shri K Anpazhakan,(Technical) upheld the impugned order by the Commissioner and rejected the appeal filed by the  Department.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates