Output-based fabrication job work was not manpower supply, leaving the service tax demand unsustainable.

Bundled fabrication-related job work and incidental activities such as shifting, bundling, packaging, stacking, chaining and filing were treated as work connected with goods under production, not as manpower supply and recruitment service, because the charges were fixed by quantity of material and not by manpower supplied. The factual findings were supported by the bills on record, and no contrary evidence displaced them. On that basis, the service tax demand was held unsustainable, as the activity did not fall within the manpower supply category.

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Issues: Whether the activity undertaken by the assessee was classifiable as taxable manpower supply and recruitment service, and whether the demand of service tax was sustainable in view of Notification No. 8/2005-ST dated 01.03.2005.

Analysis: The assessee's receipts were shown to arise from bundled fabrication-related job work and incidental activities such as shifting, bundling, packaging, stacking, chaining and filing, with charges fixed on the basis of quantity of material and not on the basis of manpower supplied. The factual findings recorded by the first appellate authority were supported by the bills on record, and no contrary evidence was produced to dislodge those findings. The activity was carried out within the factory premises before the RG-1 stage and was treated as work connected with goods under production, rather than supply of manpower.

Conclusion: The activity did not fall within the category of manpower supply and recruitment service, and the demand of service tax was not sustainable.

Final Conclusion: The order dropping the demand was upheld and the Revenue's appeal failed.

Ratio Decidendi: Where the substance of the contract shows job work or fabrication-related activities and the consideration is linked to output rather than manpower supplied, the service cannot be treated as manpower supply service for levy of service tax.

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