Job work on tonnage basis is not manpower supply; outdoor catering abatement claim was remanded for fresh examination.

A contract for bagging, stitching, handling and dispatch of finished goods on a tonnage basis was treated as execution of work, not supply of manpower, because it fixed consideration by output, did not specify worker strength or labour-based remuneration, and left control with the contractor. On that reasoning, the manpower recruitment or supply agency service demand was set aside. The outdoor catering abatement claim under Notification No. 1/2006-ST was not finally determined because the supporting documents had not been examined, so the matter was remanded for limited reconsideration of that claim.

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Issues: (i) Whether the activity of bagging, stitching, handling and dispatch of finished products under the contract amounted to supply of manpower and was taxable under manpower recruitment or supply agency services; (ii) whether the claim for abatement in respect of outdoor catering services under Notification No. 1/2006-ST was liable to be examined on remand.

Issue (i): Whether the activity of bagging, stitching, handling and dispatch of finished products under the contract amounted to supply of manpower and was taxable under manpower recruitment or supply agency services.

Analysis: The contract fixed consideration on a tonnage basis and described the appellant as an independent contractor undertaking execution of specified work. It did not prescribe any particular number of workers, did not remunerate on the basis of man-hours or persons deployed, and showed that the work force remained under the appellant's control and supervision. The arrangement was therefore one of execution of work or job work under a lump sum contract, not a contract for supplying manpower. The reasoning was consistent with the Board's clarification and prior Tribunal precedent distinguishing manpower supply from job work.

Conclusion: The demand under manpower recruitment or supply agency services was set aside and this issue was decided in favour of the assessee.

Issue (ii): Whether the claim for abatement in respect of outdoor catering services under Notification No. 1/2006-ST was liable to be examined on remand.

Analysis: The appellant did not dispute the liability in principle but sought the benefit of abatement under Notification No. 1/2006-ST and stated that supporting documents could be produced. Since the authorities below had not examined the claim on the basis of the documents, the matter required fresh consideration for that limited purpose.

Conclusion: The outdoor catering issue was remanded to the adjudicating authority for consideration of the abatement claim.

Final Conclusion: The service tax demand relating to manpower supply was annulled, while the claim relating to outdoor catering was kept open for reconsideration on remand, resulting in only partial relief to the assessee.

Ratio Decidendi: A contract for execution of specified work on a lump sum or per-tonnage basis, without fixation of manpower or payment by labour deployment, does not constitute manpower recruitment or supply agency service.

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