2022 (12) TMI 468 - AT - Service Tax

Tribunal rules in favor of appellants, services not taxable. Refunds ordered for erroneous demands.

The Tribunal held that the services provided by the appellants were not classified as 'Manpower Recruitment and Supply Agency Services,' and therefore not ... Job work - Manpower Recruitment and Supply Agency Services or not - arrangement with the farmers for harvesting and transportation of sugarcane to sugar mills - appellants while paying the cost of sugarcane to the farmers they deduct the expenses of harvesting and transportation of sugarcane - HELD THAT:- The fact is not in dispute that the appellants have no arrangement for supply of manpower for harvesting and transportation of sugarcane for supply to sugar mills. It is also the fact that charges were calculated on per ton basis therefore, the number of manpower, man-days or man-hours is not relevant for carrying out the activities of harvesting, transportation etc. The arrangement is job specific and not the manpower specific. Considering the various decisions referred including judgment of Hon’ble Bombay High Court in SATARA SAHAKARI SHETU AUDYOGIK OOS TODANI VAHTOOK SOCIETY VERSUS CCE., KOLHAPUR [2014 (12) TMI 42 - CESTAT MUMBAI], the issue is no more res-integra and the demand under Manpower Recruitment and Supply Agency Services is not sustainable. Appeal allowed - decided in favor of appellant. Issues Involved:1. Classification of services provided by the appellants as 'Manpower Recruitment and Supply Agency Services.'2. Determination of the nature of the contract between the appellants and sugar factories.3. Applicability of service tax on the activities of harvesting and transportation of sugarcane.4. Relevance of prior judicial decisions on similar issues.Issue-wise Detailed Analysis:1. Classification of Services as 'Manpower Recruitment and Supply Agency Services':The central issue in the appeals was whether the services provided by the appellants, which involved harvesting and transporting sugarcane, could be classified under 'Manpower Recruitment and Supply Agency Services.' The department argued that the expenses deducted by the appellants for these activities should be subject to service tax under this category. However, the appellants contended that their contracts were for specific tasks (harvesting and transportation) and not for supplying manpower. The charges were based on the quantity of sugarcane transported, not on the number of workers or hours worked.2. Nature of the Contract:The Tribunal examined the contracts between the appellants and sugar factories, which specified that the appellants were responsible for cutting and transporting sugarcane. The contracts made it clear that the payment was based on the tonnage of sugarcane delivered, not on the manpower supplied. The Tribunal emphasized that the contracts were job-specific and not manpower-specific. This distinction was crucial in determining the nature of the service provided.3. Applicability of Service Tax:The Tribunal referred to Section 65(68) of the Finance Act, 1994, which defines 'manpower recruitment or supply agency' and Section 65(105)(k), which defines the taxable service. The Tribunal concluded that the appellants did not fall under this category as they did not supply manpower to the sugar factories. Instead, they provided a service that involved harvesting and transporting sugarcane, which required manpower but was not about supplying manpower. The service tax demands based on this incorrect classification were deemed unsustainable.4. Relevance of Prior Judicial Decisions:The Tribunal relied on several prior judgments, including those in the cases of Satara Sahakari Shetu Audyogik Oos Todani Vahtook Society vs. CCE, Kolhapur, and others, which had consistently held that similar activities did not constitute 'manpower recruitment or supply agency services.' These judgments reinforced the Tribunal's conclusion that the appellants' activities were not taxable under the disputed category.Conclusion:The Tribunal held that the services provided by the appellants did not fall under the category of 'manpower recruitment or supply agency services' and thus were not subject to service tax. The appeals filed by the appellants were allowed, and the demands by the Revenue were set aside. The Tribunal also noted that in some cases, the appellants had made payments towards these demands, and any refunds should be processed in accordance with the law. The appeals filed by the Revenue were dismissed as devoid of merits.