Appeal Win: Appellant Not Liable for Reverse Charge on Packing Services, Tribunal Rules Favorably on Payment Structure.

The Appellate Tribunal CESTAT Ahmedabad allowed the appeal, determining that the appellant was not liable to pay service tax under the reverse charge mechanism for services received from the contractor. The Tribunal concluded that the services constituted packing services rather than Manpower Recruitment and Supply Agency Service, based on the payment structure and applicable legal precedents. Consequently, the appellant received consequential relief, with the decision pronounced on 30.04.2024.

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Issues involved: Determination of liability to pay service tax under reverse charge basis on services received from a contractor engaged in odd jobs, specifically packing of loose Cement at the appellant plant.

Summary:
The appeal before the Appellate Tribunal CESTAT Ahmedabad revolved around the question of whether the appellant was liable to pay service tax under reverse charge basis for services received from contractor M/s. A.M Enterprise, engaged in various odd jobs including packing of loose Cement at the appellant plant. The period in question was from April 2012 to March 2014, with a show cause notice issued on 21.04.2014. The department contended that the services provided constituted Manpower Supply Service, as the packing services were paid at a piece rate per tonne, incorporating the minimum wage rate. On the other hand, the appellant argued that the services rendered were packing services through a contractor who engaged labor to perform the work, with payment inclusive of the minimum wage of the personnel engaged through the contractor.

The department, represented by the learned AR, relied on the impugned order to support the demand. The appellant's advocate highlighted the statement of the General Manager dated 17.04.2014, emphasizing that the contractor was obligated to perform packing only, not supply Man Power. Reference was made to CBEC Circular No. 190/9/2015-ST dated 15.12.2015 and various case laws, including those of SHRI. DAYANAND MISHRA VS. CST & ST-RAJKOT, ROOPSINGH JODSINGH CHAUHAN AND NAVALSINGH JADEJA VS. CCE & ST, RAJKOT, among others. These cases established that engagement of labor in a contract of manufacturing or any process thereof does not constitute manpower supply. Based on the applicable Board circular and recent case law, the Tribunal concluded that the impugned service could not be categorized as Manpower Recruitment and Supply Agency Service solely based on the payment structure to the contractor.

Consequently, the appeal was allowed, granting consequential relief to the appellant. The decision was pronounced in the open court on 30.04.2024.

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