The Allahabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that a works contract service undertaking a work activity involving the supply of material does not fall under the category of ‘supply of manpower service’.
UP Bridge Corporation, the appellant assessee was registered for payment of service tax under the Reverse Charge Mechanism on taxable services namely Goods Transport Agency Service and Rent-a-Cab Operator Service as per provisions of Section 68 of Finance Act, 1994 and also engaged in performing different activities like shuttering, fixing & removal; pouring of concrete; curing; reinforcement steel cutting bending and placement; shifting of material.
The assessee appealed against the order passed by the Commissioner (Audit) Customs, Central Goods & Service Tax for confirming the service tax demand amounting to Rs.72,73,695/- and for the imposition of the penalty.
S K Mathur, the counsel for the assessee contended that the service rendered by the assessee was based on the supply of materials which does not fall under the supply of manpower service, and thus the demand raised by the department was not legally sustainable.
Sarweshwar T. Khairnar, the counsel for the department relied on the decisions made by the lower authorities and contended that the service tax demand under the supply of manpower was as per the law.
The Bench observed that the invoices raised against these contracts are not for supply of labor but are for the supply of material and work done under these contracts were for undertaking a work activity involving the supply of material and these activities do not amount to ‘Supply of Manpower Service’ to the assessee for demanding service tax.
The two-member bench comprising P K Choudhary (Judicial) and Sanjiv Srivastava (Technical) held that the activities done by the assessee did not amount to the supply of manpower services and the demand was liable to be deleted.
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