2019 (7) TMI 447 - AT - Service Tax

Tribunal rules in favor of appellant in service dispute with Reliance Fresh Limited

M/s. Sai Utsav Services Versus Commissioner of Central Excise & ST, Ahmedabad

The Tribunal partly allowed the appeal, setting aside the demand, penalties, and interest related to services provided to Reliance Fresh Limited. It was ... Classification of services - Manpower Recruitment/Supply service or Business Auxiliary Service? - service provided by the appellant for handling agricultural products - HELD THAT:- It is seen that this specific assertion was made before the lower authorities but the same is not contested or refuted by the impugned order. The agreement with Reliance Fresh Limited also indicates that the contract is a Work Order though the payment has been made on the strength of man-days provided. The contract is for handling the agricultural produce and not for supplying the manpower. In the case of M/S. SHRI RAMADHAR SINGH VERSUS C.C.E., RAIPUR [2017 (5) TMI 1536 - CESTAT NEW DELHI] in similar circumstances, it has been held that such services are not liable to tax under Manpower Recruitment or Supply Agency Service. The service provided to M/s. Reliance Fresh Limited does not qualify as Manpower Recruitment and Supply Agency Services and the demand in so far as it relates to such service cannot be upheld - the demand on the said service provided to M/s. Reliance Fresh Limited is set-aside along with penalty and interest - Penalties also set aside. Appeal allowed in part. Issues:Confirmation of demand of service tax, interest, and penalties under Sections 76 and 78 of the Finance Act, 1994 for services provided to Reliance Fresh Limited.Analysis:The appeal was filed against the confirmation of demand of service tax, interest, and penalties under Sections 76 and 78 of the Finance Act, 1994. The appellant contested the demand on the grounds that the service provided to Reliance Fresh Limited did not fall under Manpower Recruitment or Supply services but rather under Business Auxiliary Service. The appellant argued that the manpower provided was under their direct control and supervision, exempting it from service tax as per Notification No. 14/2004-ST dated 10.09.2004. The appellant also cited relevant case laws and CBEC Circulars to support their argument.The Assistant Commissioner relied on the impugned order, emphasizing that the contract clearly involved the supply of manpower with payment based on man-days, regardless of the nature of work done. The agreement did not specify the work to be done by the appellant, and payment was solely linked to the number of man-days.Upon reviewing the submissions, the Tribunal found merit in the appellant's argument. It was noted that the service provided to Reliance Fresh Limited was for handling agricultural produce and not for supplying manpower, as the manpower was under the appellant's control and supervision. Citing precedents, the Tribunal concluded that services where the workforce is under the control of the service provider do not qualify as Manpower Recruitment or Supply Agency Service. Therefore, the demand related to services provided to Reliance Fresh Limited was set aside, along with penalties and interest. Additionally, it was clarified that penalties under both Sections 76 and 78 of the Finance Act, 1994 cannot be imposed simultaneously. As the demand related to the supply of manpower to Reliance Fresh Limited was set aside, the penalty under Section 78 was also set aside accordingly.In conclusion, the appeal was partly allowed, setting aside the demand, penalties, and interest related to the services provided to Reliance Fresh Limited. The judgment was pronounced in open court on 05.07.2019.