2024 (3) TMI 407 - AT - Service Tax

Manpower deployment for specific job functions like furnace operations not taxable as recruitment service

CESTAT Ahmedabad held that deployment of manpower for specific activities including melting preparation, furnace operations, and metal pouring does not ... Classification of service - Manpower Recruitment or Supply Agency Service or not - activity of deputing certain manpower for undertaking activities such as preparing and planning for melting, doing melting of required material in furnace, pouring of liquid metal in temperature backed shell, deliver poured shell to knock out department - HELD THAT:- The matter is no longer res-integra as this Tribunal has already decided this matter in the case of NARESH K SOLNAKI VERSUS C.C.E. & S.T., RAJKOT [2023 (9) TMI 652 - CESTAT AHMEDABAD] where it was held that when the agreement between the service provider and recipient is for a particular job and not for supply of man power, the activity cannot be classified under ‘Man Power Recruitment or Supply Agency Service’. The impugned order-in-appeal is without any merit and therefore set aside - appeal allowed. Issues Involved:1. Classification of the appellant's activities under 'Manpower Recruitment or Supply Agency Service'.2. Applicability of service tax on the appellant's activities.3. Precedents and judgments relevant to the classification of services.Summary:Issue 1: Classification of the appellant's activities under 'Manpower Recruitment or Supply Agency Service'The department considered the appellant's activities, which included preparing and planning for melting, melting material in a furnace, pouring liquid metal, and delivering poured shells, as falling under 'Manpower Recruitment or Supply Agency Service'. The appellant argued that these activities were job work, with manpower under their control, and thus did not fall under the said service category. The Tribunal referenced a similar case, Naresh K Solanki vs. CCE Rajkot, where it was determined that such activities did not constitute 'Manpower Recruitment or Supply Agency Service'.Issue 2: Applicability of service tax on the appellant's activitiesThe department issued a show cause notice demanding service tax of Rs. 5,30,579/- under Section 73(1) of the Finance Act, 1994. The appellant contended that the activities were part of the manufacturing process and were compensated on a per kilogram basis, not as manpower supply. The Tribunal found that the appellant's activities were specific job assignments with fixed consideration per kilogram, and the service recipient did not control or supervise the manpower. Consequently, the activities were classified as 'Business Auxiliary Service' rather than 'Manpower Recruitment or Supply Agency Service'.Issue 3: Precedents and judgments relevant to the classification of servicesThe Tribunal cited several judgments, including Dhanashree Enterprise vs. CCE Pune-I, Ritesh Enterprises vs. CCE Bangalore, CCE Aurangabad vs. Shri Samarth Sevabhavi Trust, and Seven Hills Construction vs. CST Nagpur. These cases established that when an agreement is for a specific job and not for the supply of manpower, the activity cannot be classified under 'Manpower Recruitment or Supply Agency Service'. The Tribunal concluded that the appellant's activities were not subject to service tax under the disputed category, setting aside the impugned order and allowing the appeal.Conclusion:The Tribunal ruled that the appellant's activities did not fall under 'Manpower Recruitment or Supply Agency Service' but were instead 'Business Auxiliary Service'. The demand for service tax was not sustainable, and the appeal was allowed, setting aside the impugned order.