2018 (3) TMI 1282 - AT - Service Tax

Tribunal overturns service classification, finding appellant's activities do not meet criteria.

M/s. Shailu Traders Versus C.C.E., Indore

The Tribunal ruled in favor of the appellant, setting aside the order that classified the services under 'Manpower Recruitment or Supply Agency Service.' ... Man Power Recruitment or Supply Agency Service - Held that: - Since the appellant was no way connected with any recruitment or supply of manpower to the client, rather the manpower/employees were under the active control and supervision of the appellant and were deployed for undertaking the assigned job work entrusted by the principal, such service should not fall under the taxable category of „Manpower Recruitment and Supply Agency Service - appeal allowed - decided in favor of appellant. Issues:1. Classification of services provided by the appellant under 'Man Power Recruitment or Supply Agency Service.'Analysis:The appeal was against an order confirming that the services provided by the appellant fell under the taxable category of 'Man Power Recruitment or Supply Agency Service.' The appellant argued that the services rendered, involving material handling and shifting activities as per an agreement with a company, did not constitute man power recruitment or supply agency service. The appellant had control and supervision over the employees engaged for the assigned task, as per the agreement terms. The Tribunal noted that the appellant was not involved in the recruitment or supply of manpower to the client. Instead, the employees were under the appellant's active control and supervision, deployed for specific job work entrusted by the principal. Thus, the Tribunal concluded that the services should not be classified as 'Manpower Recruitment and Supply Agency Service.'The Tribunal examined the agreement between the appellant and the company, which outlined that the contractor (appellant) had the authority to decide the number of employees for the work, dictate their manner of execution without interference from the principal, and be responsible for statutory labor and factory law compliance. The agreement also specified that the principal had no control over the employees' supervision, discharge, or re-employment. Based on the agreement terms and the nature of services provided, the Tribunal found that the appellant's activities of material handling and shifting, with employees under its direct control and supervision, did not align with the definition of 'Manpower Recruitment and Supply Agency Service.'In conclusion, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant. The judgment was pronounced in open court on 10.11.2017.