Contracts for work execution, not manpower supply, exempt from service tax. Appeals allowed with consequential reliefs.

The appellants in both appeals were found not liable to pay service tax under Manpower Recruitment or Supply Agency Service (MRSAS). The Tribunal determined that the essence of the contracts was for work execution, not manpower supply, as payments were based on tonnage or unit basis, not per person basis. Therefore, the demands under MRSAS were set aside, and the appeals were allowed with consequential reliefs.

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Issues involved:
The issue involved in both appeals is whether the appellants are liable to pay service tax under Manpower Recruitment or Supply Agency Service (MRSAS).

Appeal filed by Mr. A. Natarajan (ST/4249/2013):
The appellant, registered under MRSAS, provided services for water cooling system pipeline laying to M/s.BHEL Trichy and did not discharge service tax. Show cause notice was issued, and after due process, the demand was confirmed by the original authority and Commissioner (Appeals). The appellant argued that the activity involved manufacturing valves on tonnage basis, not covered under MRSAS.

Appeal No. ST/42353/2013:
M/s.Anand Contractors provided MRSAS for various works at M/s.BHEL Trichy and received payment liable to be taxed under MRSAS. Show cause notice was issued for a demand of Rs.15,85,666/- along with interest and penalty. The original authority and Commissioner (Appeals) confirmed the demand. The appellant argued that the activity was on a unit quantity basis, not per person basis, and relied on relevant judgments.

Arguments and Analysis:
The appellants argued that the activities were ancillary to manufacturing and not subject to service tax. They also contended that the activities might fall under Business Auxiliary Service (BAS) instead of MRSAS. The department reiterated the findings in the impugned orders.

Decision:
After examining the work orders and invoices, it was found that the contracts were for work execution, not supply of manpower. Payments were made on tonnage or unit basis, not per person basis. Citing relevant case law, it was established that the essence of the contracts was for work execution, not manpower supply. The Tribunal held that the appellants were responsible for executing work, not providing manpower, and the demand under MRSAS could not sustain. Therefore, the impugned orders were set aside, and the appeals were allowed with consequential reliefs.

Separate Judgement:
There was no separate judgment delivered by the judges in this case.

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