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of <h1>Tribunal rules in favor of appellants, determining service tax not applicable for specific task-based agreements.</h1> The Tribunal set aside the demand for service tax, interest, and penalties against the appellants for providing manpower supply to a company. It held that ... Classification of services - manpower recruitment or supply agency service or not - work of grinding roasted coffee beans, blending coffee powder with chicory and packing of coffee powder - Held that:- It is seen from the invoices as well as from the records that the appellant was receiving charges on the basis of kilogram of coffee powder which is subjected to various activities of grinding, mixing, blending etc. The payment is not in respect of number of persons engaged or work done on daily basis or hourly basis. The Tribunal in the case of Divya Enterprises Vs. Commissioner of Central Excise, Mangalore [2009 (12) TMI 155 - CESTAT, BANGALORE] had occasion to analyse a similar issue and held that when lumpsum work is agreed upon to be rendered on rate contract payment, the same would not amount to manpower recruitment or supply agency service. Demand cannot sustain - appeal allowed - decided in favor of appellant. Issues:- Allegation of providing manpower supply without discharging service tax- Confirmation of demand, interest, and penalties by original authority- Appeal before Commissioner (Appeals) upholding demand, interest, and penalties- Applicability of the activity to manpower recruitment or supply agency serviceAnalysis:The judgment revolves around the allegations against the appellants for providing manpower supply to a company without paying service tax. The original authority confirmed the demand, interest, and penalties, which were subsequently upheld by the Commissioner (Appeals), leading to the appellants filing the present appeals. The main issue addressed in the judgment is whether the appellants' activities can be categorized as manpower recruitment or supply agency service.During the proceedings, the appellant's counsel argued that the appellants were engaged as job workers for the company on specified rates for activities like grinding, blending, and packing coffee powder. The charges were based on the quantity of goods processed, not on the basis of manpower or hourly rates. The counsel contended that the appellants, being proprietors, did not fall under the category of a manpower recruitment or supply agency service. The counsel also cited relevant legal precedents to support this argument.On the other hand, the respondent supported the findings of the impugned order, asserting that the appellants provided labor work for various activities at the company's premises and received charges accordingly. The respondent maintained that the appellants were indeed supplying manpower to the company.After hearing both sides, the Tribunal analyzed the invoices and records, noting that the charges were based on the amount of coffee powder processed through activities like grinding and blending, not on the number of persons engaged or daily/hourly work. Citing a relevant precedent, the Tribunal concluded that when a lump sum work is agreed upon based on a rate contract payment, it does not amount to manpower recruitment or supply agency service. Therefore, the Tribunal held that the demand could not be sustained and set it aside, allowing the appeals with any consequential relief.In conclusion, the judgment clarifies the nature of the appellants' activities in relation to manpower supply, emphasizing the basis of charges and contractual agreements to determine the applicability of service tax obligations.
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