2023 (7) TMI 767 - AT - Service Tax

Tribunal rules subcontractor services as Construction/Works Contract, not Manpower Supply. Appeal allowed.

RKEC Projects Pvt Ltd Versus Commissioner of Central Tax Visakhapatnam - GST

RKEC Projects Pvt Ltd Versus Commissioner of Central Tax Visakhapatnam - GST - TMI Issues involved: Determination of whether the service received by the appellant from sub-contractors is Manpower Supply Service or Works Contract Service.Summary:The Appellant, a company engaged in civil constructions, was under scrutiny for booking certain expenses as 'Labour Charges' and 'Construction expenses' in their accounts, which the Revenue alleged to be Manpower Supply services attracting service charge under Reverse Charge Mechanism. The Revenue issued a Show Cause Notice (SCN) proposing a demand and penalties for the period under dispute. The Appellant contended that the work awarded to sub-contractors was for construction activity involving goods, not Manpower Supply service. The Principal Commissioner in a similar case for a subsequent period observed that the services were construction and works contract services due to the involvement of materials. Relying on this finding, the Appellant appealed for similar treatment.Upon review, the Tribunal found that the Work Order was for construction activity with rates specified for work to be executed, allowing the sub-contractor freedom to employ workmen and use tools as needed. The Appellant was not obligated to provide workmen, and no specific rate per workman was mentioned. As the main contract was for construction activity, the sub-contractor's work fell under Works Contract service. Therefore, the service received by the Appellant was deemed to be Construction service and/or Works Contract service, not Manpower Supply service. The Tribunal allowed the Appeal and set aside the Impugned Order, granting the Appellant consequential benefits as per the law.