Tribunal rules no Service Tax for in-house work, citing agreement terms and payment basis. Revenue appeal rejected.

The Tribunal upheld the decision that no Service Tax was payable for the in-house fabrication work, considering the nature of the agreement between the parties and the basis of payment for the services provided. The appeal by Revenue challenging the respondent's liability to pay Service Tax under 'Manpower Recruitment and Supply Agency Service' for in-house fabrication work was rejected. The absence of a written contract, payments based on the weight of goods manufactured, and the use of materials and machinery of M/s Alpha Services were key factors in determining that the arrangement did not constitute supply of manpower.

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Issues:
- Liability of Service Tax under 'Manpower Recruitment and Supply Agency Service' for in-house fabrication work.
- Interpretation of the absence of a written contract between the service provider and the service receiver.
- Consideration of payment basis for the service provided.
- Application of CBEC Circular and relevant case laws.

Analysis:
- The appeal was filed by Revenue against the Order-in-Appeal No. 214/2015, challenging the decision that the respondent was not liable to pay Service Tax for in-house fabrication work done for M/s Alpha Services. The Department contended that the respondent should pay Service Tax under the category of 'Manpower Recruitment and Supply Agency Service'. The Original Adjudicating Authority had ordered the payment of Service Tax, but the Commissioner (Appeal) set aside the demand, leading to the current appeal by Revenue.

- The Revenue argued that the respondent provided manpower to M/s Alpha Services, and the consideration received for the services was evident. They contended that the Commissioner (Appeals) erred in concluding that no Service Tax was payable.

- The respondent's advocate justified the Commissioner's decision, emphasizing the absence of a written contract between the parties. He highlighted that payments were based on the weight of goods manufactured, and pointed to a Certificate from M/s Alpha Services specifying the work carried out by the respondent. Furthermore, he referenced a CBEC Circular and relevant case laws supporting the argument that when the value of service is based on the quantum of job work undertaken, it does not constitute supply of manpower.

- Upon review, the Tribunal noted the absence of a written contract between the parties and examined the Certificate of Work issued by M/s Alpha Services. It was certified that the respondent was engaged in manufacturing cranes and sub-assemblies, with payments based on the weight of finished goods. The employees of the respondent worked under the direction of M/s Alpha, using their materials and machinery for fabrication work.

- Referring to a previous case, the Tribunal found that the issue was not new and cited precedents where similar arrangements were considered lump sum agreements rather than supply of manpower. Following the Tribunal's earlier decision, the impugned order was upheld, and the appeal by Revenue was rejected.

Therefore, the Tribunal upheld the decision that no Service Tax was payable for the in-house fabrication work, considering the nature of the agreement between the parties and the basis of payment for the services provided.

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