2018 (8) TMI 1015 - AT - Service Tax

Tribunal rules in favor of appellant, setting aside service tax demand.

M/s. Raj Enterprises Versus Commissioner of Service Tax, Ahmedabad

M/s. Raj Enterprises Versus Commissioner of Service Tax, Ahmedabad - TMI Issues:Interpretation of job work agreement for electronic connectors and cable harness; Classification of service under Manpower Recruitment and Supply Agency service; Control and responsibility over employees; Taxability of job work as supply of manpower.Analysis:The case involved a dispute regarding the classification of services provided by the appellant under a job work agreement with M/s. Molex Mafatlal Micron Pvt. Limited for manufacturing electronic connectors and cable harness. The department contended that the appellant's activity was akin to supplying manpower, thus attracting service tax under the category of Manpower Recruitment and Supply Agency service.The appellant argued that they were engaged in manufacturing goods using their own employees and not merely supplying manpower. The charges were based on job work and not on the number of employees provided. The appellant cited several judgments to support their case, emphasizing the nature of the agreement and the actual work performed.The Assistant Commissioner for the Revenue maintained that the appellant's responsibilities towards employees indicated control by M/s. Molex Mafatlal Micron Pvt. Limited, leading to the conclusion that the appellant was providing manpower recruitment or supply agency service.Upon careful consideration of the arguments and perusal of the record, the Tribunal found that the appellant's employees were engaged in manufacturing on behalf of the principal under job work arrangements. Payment was linked to production, not the number of employees. The Tribunal emphasized that the appellant did not supply manpower to the principal and distinguished between job work and supply of manpower. Referring to previous judgments, the Tribunal reiterated that job work performed with the help of manpower does not fall under Manpower Recruitment or Supply Agency Service.Consequently, the Tribunal ruled in favor of the appellant, setting aside the demand for service tax. The judgment highlighted that the job work carried out by the appellant did not constitute supply of manpower and was not taxable under the category of Manpower Recruitment and Supply Agency Service. The decision aligned with previous rulings on similar issues, ultimately allowing the appeal.This comprehensive analysis of the judgment delves into the interpretation of the job work agreement, the classification of services, control over employees, and the taxability of the job work, providing a detailed understanding of the legal reasoning and outcome of the case.