2016 (2) TMI 943 - AT - Service Tax

Tribunal rules services not manpower agency, overturns service tax order

Manganga Oos Todani Vahatuk Yantranchi, Sah. Sanstha Maryadit Versus Commissioner of Central Excise Kolhapur

Manganga Oos Todani Vahatuk Yantranchi, Sah. Sanstha Maryadit Versus Commissioner of Central Excise Kolhapur - TMI Issues:Service tax liability on the appellant under the category of 'manpower recruitment and supply agency services' for supplying labor for harvesting and transportation of sugar cane to a sugar factory.Analysis:The appeal was filed against an Order-in-Original passed by the Commissioner of Central Excise, Kolhapur, regarding service tax liability on the appellant for supplying labor for harvesting and transportation of sugar cane to a sugar factory. The issue revolved around whether the activity fell under the category of 'manpower recruitment and supply agency services.' The Tribunal noted that a similar case had been decided in favor of the assessee by the Hon'ble High Court of Bombay. The Tribunal referred to the judgment and held that the activity undertaken by the appellant did not fall under the said category. The Tribunal emphasized that the nature of the work must be understood in the context of the agreement between the parties. It also highlighted that the services provided were part of a package deal for supplying essential raw material to the sugar factory, and the manner in which the work was done was not the concern of the factory. The Tribunal relied on a Supreme Court judgment to support its interpretation of the agreement between the parties.The Tribunal further analyzed the show cause notice issued by the Revenue and the history of service tax in the country. It noted that the package deal in question was not subjected to service tax at the relevant time, and the Revenue was unable to demand service tax from the appellant. The Tribunal highlighted that subsequent amendments had made all services taxable except those in the 'negative list.' It concluded that the impugned order demanding service tax was unsustainable and set it aside, allowing the appeal and granting consequential relief to the appellant.In conclusion, the Tribunal ruled in favor of the appellant, holding that the services provided did not fall under the category of 'manpower recruitment and supply agency services.' The Tribunal considered the nature of the work, the agreement between the parties, and the historical context of service tax provisions to reach its decision. The impugned order demanding service tax was deemed unsustainable and set aside, providing relief to the appellant.